LAHORE – The business community on Sunday expressed grave concern over sharp decline in foreign investment that posted a massive decline for the fourth consecutive year mainly due to executive-judiciary tussle, energy crisis, adverse law and order situation, lack of infrastructure and instability in the economic policies. FDI narrowed down by 50 percent during the last fiscal year 2011-12 (FY12) as compared to fiscal year 2010-11 (FY11).

Trade bodies’ representatives, manufacturers and financial experts have stated that rising tussle between executives and judiciary is hitting hard the entire economy and posing risk for new investment, which needed to be tackled through separation of constitutional and general courts and by adopting comprehensive policy approach, involving trade and industry in the country.

“Tension between judiciary and government has hindered the foreign investment. The situation of lower courts is also very bad, as the higher courts are indulged in hundreds of political cases, having no time to revamp the overall judicial system at lower level,” said APAT general secretary Naim Mir. Presently, more than 60 per cent cases at higher courts are regarding executive, how the judiciary will get time to take issues of common man, he questioned.

He said the extortion mafia has been given free hand while both the government as well as the judiciary are quite spectators as no one is taking action against the rising incidents of extortion from traders. The investors scared of the fact that govt never follows the directives of the courts, which may put their investment at risk in Pakistan, as they cannot approach the court in any dispute.

He said that traders’ community has started to dislike democracy owing to corruption and ineligibility of politicians. “At the same time the government should ensure that all institutions remain immune to any sort of undue interference as this will help improve quality of governance without which foreign investment cannot be attracted”, he maintained. He urged the government to broaden the tax net by bringing the agriculture and services sectors into the tax net to enhance tax-to-GDP ratio. Public Sector Enterprises (PSEs) like PIA, Railways and Pakistan Steel Mills, generating a loss of Rs400 billion annually should be managed professionally or be privatized to avoid the huge loss to the national exchequer.

LCCI former vice president Aftab Ahmed Vohra said that a number of sectors in Pakistan including infrastructure development, coal, energy, agriculture, livestock, textiles and pharmaceutical offered lucrative investment opportunities to foreign investors but unfortunately due to absence of a proper marketing strategy those opportunities were unattended even that day.

The taxes of traders and manufacturers should not be wasted on bailout packages of Public Sector Enterprises (PSEs), he added.

All Pakistan Hardware Merchants Association central chairman Usman Ghani said that severest-ever energy shortfall, bad law and order situation, institutional fragility and the political instability were the major factors keeping the foreign investors away. He feared that the fall in Foreign Direct Investment (FDI) was likely to affect adversely the country’s economic growth therefore the government should adopt remedial measures to reverse this trend and to attract foreign investment.

At the same time the slow government response to deal with aggravating energy crisis was also spoiling not only the local investment scenario but also sending a very negative signal to potential foreign investors. He said that a special committee comprising members of the Parliament, trade bodies and manufacturers’ associations’ representatives should be formed to identify the solutions to attract foreign investment that is a prerequisite to economic growth.