Don’t punish the investor


-Editorial

Why do the investors shy away from investing in Pakistan? There can be a host of reasons. Multinationals do not want this country to be a source of output for products they market world-wide because of political and regional instability as their global supply chain has to be least affected since they constantly endeavour to retain and increase their market share and cannot afford any disruption.

We are very conscious of our location being in close proximity of the world’s two most populous countries – China and India. However, the infrastructure needed to move goods is not only missing but also our relationship with our eastern neighbour is not conducive to business either.

Investors base their decisions on various factors such as availability of the raw material that they need for their products or close proximity of the market for their products, or both; and above all else they gauge the ability to quickly get in and out of a country they invest in.

They also look at cheap land availability, taxation system, infrastructure, as well as availability of skilled labour prior to investment. Therefore, the laws relating to tax liability need to be transparent and a judiciary system which ensures speedy justice.

Unfortunately, however, the higher courts in Pakistan have intervened in a manner widely despised by foreign investors. Scrapping of the Pakistan Steel Mill’s privatisation and a shoddy treatment meted to Reko Diq investor are bound to cast a long shadow over country’s investment prospects.

Foreign investors may or may not have indulged in giving a raw deal to the country, but the onus on protecting the right of the citizens lies with those who are at the helm of affairs. If anyone has indulged in lining his pockets, to the detriment of the country’s interest, needs to be punished but we need to refrain from penalising the investor.

Members of higher judiciary need to take into consideration a stark reality: we are a capital-starved country having scanty knowledge and experience in certain kinds of businesses. Thus we need to be extra cautious and need not always throw a spanner in the works of investors.

The then Chief Justice Iftikhar Muhammad Chaudhry took a suo motu notice of the construction of a grocery outlet on an amenity plot in Karachi. Now the Supreme Court has ruled on the review petition filed by investors by rejecting it. Foreign or local investors are expected to do a search of land record prior to investing.

It is not material for them to know at what rate or what purpose the land has been leased out to a local concern. In the said case Pakistan Army had granted use or occupation of the land to Army Welfare Trust (AWT) which later leased the amenity plot to Makro under a lawful agreement.

If the lease amount or rate is concessional it is strictly between the Army and its welfare trust; it should be of no concern to the investor.

How the lease amount is divided between the two local concerns is not material in this case. Similarly, mining of copper and gold by a noted concern should be of no concern to the Balochistan government. Who mines the copper – whether an Australian company or a Chilean entity – is immaterial.

This brings to one’s mind the famous remarks of Deng Xiaoping: “It doesn’t matter whether a cat is white or black, as long as it catches mice”. The Balochistan government’s sole concern should be to maximise what it earns in dividend. Nothing else does matter.

Oil exploration companies have ventured in countries where the law and order situation far worse than anyone has understood it until now. The Sudan-South Sudan conflict is a strong case in point.

They have the resources to pay for private security supplemented by the local law enforcing agencies. They invest because of the profit motive. We need to attract them and not grudge profits earned by them. After all, profit is repatriated after payment of tax.

Not only will people get job opportunities, they will also have access to new skills. Until then, let us make policies which are attractive to investors.

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