Pakistan's economic growth has been hindered by low domestic and foreign investments. The Special Investment Facilitation Council aims to address these challenges by streamlining regulatory procedures, attracting foreign investment, and focusing on key sectors to enhance competitiveness and accelerate economic development.

Over the past 15 years, Pakistan has been stuck in a low growth trajectory. The main reason is sluggish domestic and foreign investments, which have impeded the growth of productivity, resulting in low competitiveness, and restricted the development of infrastructure; all of these have limited the expansion of the economy. Factors constraining investments include:
▪ Macroeconomic uncertainty (i.e., high inflation, currency fluctuation, and fiscal and external imbalances) that makes the country a risky destination for investment.
▪ Lagging infrastructure hinders the potential of the nation’s aspirations for growth.
▪ Complex bureaucratic red-tape and time-consuming regulatory procedures create distrust against investment.
▪ Bad governance deters investors who greatly value rule of law and transparency.
▪ Chronic energy shortages affect industrial production.
▪ Relatively small domestic market limits the potential benefits of the economies-of-scale
▪ Legal and operational challenges faced by investors when it comes to availing the dispute settlement mechanism.
If these investment-related problems are not addressed, high and sustained economic growth will stay elusive. Hence, prompt policy interventions are necessary to address investment problems.
The State of Foreign Investment in Pakistan
Between 2000 and 2023, Pakistan attracted foreign investment amounting to USD 47.59 billion, i.e., USD 2.1 billion per annum; out of this, 46 percent was in-flowed between 2005 and 2010. Foreign investment in privatized companies has been a significant outcome of economic liberalization policies. Pakistan has privatized several state-owned enterprises (SOEs) in various sectors, including energy, telecom, banking, etc. These investments have contributed significantly to economic growth, improved services, and increased competition.
Foreign investment in privatized companies has brought much-needed capital, expertise, and technology, thus contributing to economic growth and development. However, the process has faced challenges and controversies, including concerns about transparency, accountability, and adverse impact on local industries.
So far, Pakistan’s ability to attract foreign investment has been far below its latent potential. Studies predict that current foreign investment is 3 to 4 times lower than its real potential. The shortfall in investment is the result of continual structural imbalances, with no concerted response from decision-makers.

Pakistan has privatized several state-owned enterprises in various sectors, including energy, telecom, banking, etc. These investments have contributed significantly to economic growth, improved services, and increased competition.

Why Invest in Pakistan? 
Evidently, Pakistan has a large, untapped investment potential that needs to be capitalized. It has an abundance of natural resources, a large pool of skilled and semi-skilled workforce, a liberal investment policy regime, and its strategic location. In view of these, Pakistan intends to attract foreign direct investment (FDI) in high-end and export-oriented sectors that should be strongly integrated with global value chains to move forward.
Up until now, Pakistan’s FDI has been reliant on its traditional investment partners, including the United States, Europe, Japan, and China. Now, it intends to diversify its FDI from traditional sources to additional sources, including the Gulf Cooperation Council (GCC) countries, Turkiye, Malaysia, and other countries.
Establishment of SIFC
In response to many issues investors face, the Government of Pakistan (GoP) has established the Special Investment Facilitation Council (SIFC) to instil confidence in investors and harness the country's investment potential. The primary objective of SIFC is to make a meaningful contribution towards the economic revival. By functioning as a unified platform for investors, it aims to effectively reduce the intricacies and time constraints associated with commercial/corporate procedures. Its establishment is thus a positive step towards improving the country's business ecosystem as it offers a one-window operation geared towards providing dedicated and personalized support to investors while addressing their concerns that are impeding their decision to invest. 
SIFC thus aims to: 
▪Showcase key sectors having high investment potential with competitive advantage to drive economic growth and increase exports, such as textiles, food processing agriculture, sports goods, surgical goods, leather goods, IT, and automotive parts.
▪ Facilitate investors by simplifying and expediting regulatory approvals, licenses, and permits; and thus, making it easier for them to set up and operate businesses.
▪ Develop infrastructure, such as energy and transportation projects, to enhance sectoral growth.
▪ Introduce policy reforms to create a conducive business environment, promoting competition and innovation.
▪ Foster public-private partnerships, connecting foreign investors with local businesses to develop strategic partnerships, and facilitating technology transfers.
▪ Assist export industries to gain access to the international markets.

The primary objective of SIFC is to make a meaningful contribution towards the economic revival. By functioning as a unified platform for investors, it aims to effectively reduce the intricacies and time constraints associated with commercial/corporate procedures. 

SIFC is managed by an apex committee that includes the Prime Minister, Chief of the Army Staff, and other high-ranking government representatives (federal and provincial), whereas the Board of Investment handles day-to-day operations. Thus, the Council unites civilian and military expertise to instil confidence in potential investors and propel economic growth.

Significant progress has already been achieved in the Reko Diq initiative for the efficacy of electricity Distribution Companies (DISCOs) and the privatization of Pakistan International Airlines (PIA) and some other SOEs.

Hallmark of SIFC's Operation
To offer a single point of contact for all investment-related processes and operations, SIFC has:
▪ Consolidated multiple agencies and processes into one platform to save investors’ time and effort, minimizing interactions with various government entities.
▪ Simplified complex procedures, making it easier for investors to track the investment process, thus enabling investors to initiate projects swiftly.
▪ Enhanced transparency by providing clear guidelines, procedures, and timelines.
▪ Provided investment-related personalized support to address specific needs and concerns.
▪ Leveraged automated and digitalization processes to reduce manual errors, overcoming delays and thus increasing overall efficiency.
▪ Created an attractive destination for investors, differentiating Pakistan from other countries with more complex investment procedures.
Transformative Potential of SIFC
SIFC can be a powerful tool for economic transformation, driving economic growth, stability, and prosperity. It has set FDI targets of USD 5 billion in a year and up to USD 100 billion in investments over the next three years. Additionally, SIFC has set a target to achieve a gross domestic product (GDP) of USD 1 trillion by 2035 to place Pakistan amongst the prosperous developing countries with high social well-being.
More specifically, by facilitating long-term investment, SIFC can help to: 
▪ Attract much-needed foreign investment, creating new opportunities for economic growth and development, in the sectors including energy, infrastructure, manufacturing, and information technology.
▪ Enhance global competitiveness for improving international standing and recognition.
▪ Support the growth of key industries driving industrialization and job creation.
▪ Promote investment in export-oriented sectors thus improving trade balance.
▪ Reduce the country's economic vulnerability and promote economic stability. 
▪ Facilitate collaboration between the public and private sectors, thus driving innovative solutions for economic growth. 
▪ Attract investment in critical infrastructure projects, improving transportation, energy, and communication networks. 
▪ Reduce bureaucratic hurdles and increase transparency for approvals of projects on fast track.
▪ Establish a dispute resolution mechanism.
So far, the SIFC has identified several strategic projects. These projects include oil refining, coal and mining, hydropower, solar installation, and advanced telecom facilities. Significant progress has already been achieved in the Reko Diq initiative for the efficacy of electricity distribution companies (DISCOs) and the privatization of Pakistan International Airlines (PIA) and some other SOEs.

With a plentiful and highly skilled workforce, Pakistan has the ability to attract investment from this growing global semiconductor industry and thus become the leading location for the manufacturing of semiconductors.

More specifically, the ‘Semiconductor Industry Development Plan’ is being implemented to attract billions of dollars in investment. This cross-cutting project aims to concentrate on the design of semiconductors, thus creating multiple opportunities for the establishment of semiconductor-based industries. With a plentiful and highly skilled workforce, Pakistan has the ability to attract investment from this growing global semiconductor industry and thus become the leading location for the manufacturing of semiconductors.
Investing to Bolster Growth
A key catalyst for attracting FDI is the SIFC initiative. It has significantly improved the business environment by introducing many changes to foster a favourable investment climate in Pakistan. Building on SIFC’s accomplishments, following refinements can further enhance its efficiency and effectiveness:
▪ Going beyond privatization and enticing fresh investment to reach the ambitious growth target set for 2035. 
▪ Attract investment in sectors where Pakistan has a high competitive advantage, especially in industries producing intermediate inputs with strong backward- and forward linkages with local industries. This will ensure the sustainability of foreign investment in the country.
▪ Regularly evaluate and streamline the processes and procedures to reduce unnecessary steps and bureaucratic frictions.
▪ Leverage technology to facilitate online applications, tracking, and processing, providing a seamless and user-friendly experience.
▪ Offer easily accessible and clear information to foreign investors, promoting clarity and assurance. 
▪ Develop a team of knowledgeable, welcoming, and proactive professionals responsive to investors' needs. 
▪ Establish a robust feedback system to collect investors' suggestions and concerns and swiftly act upon them to make improvements.
▪ Promote interagency coordination and seamless communication to streamline one-window operation. 
▪ Offer proactive support and guidance to investors throughout the process, including post-establishment support to ensure their success. 
▪ Proactively engage with investors, businesses, and industry associations to understand their needs and concerns and provide data-backed solutions.
▪ The country's Logistic Performance Index ranking of 122^nd emphasizes the need for SIFC to reform and digitize clearance of inward and outward shipments by eliminating bureaucratic bottlenecks and increasing trade facilitation.
▪ SIFC needs to combat capital flight and revenue leakage by curbing under-invoicing of exports and over-invoicing of imports.
SIFC is a necessary condition to attract investment, but other attractive factors must complement it to make Pakistan a compelling destination for foreign investment; that includes:
▪ A stable and favorable business environment.
▪ Competitive tax policies and incentives.
▪ Proficient and cost-effective labor.
▪ Strong protection of intellectual property rights.
▪ Access to large and growing foreign markets to benefit from economies-of-scale.

The writer is a Professor of Economics at the School of Social Sciences and Humanities at NUST, Islamabad. 
E-mail: [email protected].