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The Board of Investment (BOI) has been in the news with declining investment flows and frequent changes, where three chairmen and three secretaries have been changed during 18 months.

And prior to that, for long, it remained dormant; largely a parking place for near and dear ones with little to show in attracting FDI into Pakistan. The country was, therefore, forced to keep borrowing and now lies buried under a mountain of debt.

This article is not an exercise in any blame game but a call for saving the BOI from being reduced to another do-nothing bureaucratic body.

The root cause has been a defective framework created through an ill-advised law — the BOI Ordinance 2001 — which seems to have been thoughtlessly promulgated without understanding the nature of ‘the investment function’, specially why cross-border, international investments are made and how best Pakistan could benefit from FDI. Its placement betrays lack of the understanding that investment is a non-linear, inert-agency function which pulls together inputs and cooperation from several federal and provincial bodies and cannot be attached as an appendage to any linear ministry like education, agriculture, finance, industry, petroleum etc.

It damaged its credibility by sending a message to the investor community that an organization so lowly placed in the power structure of the country that could not look after itself would be of no help to investors. This law shackled the BOI within multiple layers, effectively putting up barriers to investment flows as any proposal made to the BOI had to cross multiple hurdles before it could see the light of day.

It also does not seem to have internalized the fact that over 75 percent of capital and technology in the world are owned by the private sector and over 100 countries are competing for that investment and technology. Recognition of this simple set of facts should have brought home the realization that for Pakistan to succeed in such a competitive environment, it required, first of all, high quality human resources, since ‘you cannot be competitive if you are not competent’. Also, to make the BOI an autonomous, robust and powerful organization well placed in the power structure of Pakistan, with direct and easy access to the prime minister to facilitate investment decisions, overcome turf-battles and red tape.

Instead, this ordinance buried the BOI under several layers, and tied it as an appendage to the tails of a division within a ministry. In the words of section 3 (1.2) (b) of the ordinance, the BOI will be attached to whichever division the business of investment is allocated. This lack of ownership and playing football with the premier investment organization of the country translated into lack of commitment, decline in efficiency and an indifference reflected in vague generalizations about investment.

Declarations like ‘Pakistan is open for business’ or ‘we welcome foreign direct investment’ carry no weight with investors who want to see if these are backed by concrete proactive measures. An important part of proactivity requires the BOI to go out and market Pakistan in capital exporting countries with a portfolio of Pakistan’s own priority investment projects. Instead, it wants foreign investors to come knock on our doors and wake us up with their investment proposals; as if they have no other countries to invest in.

This laidback approach continues in other areas too. Earlier, the BOI used to publish investment literature of Pakistan in major languages of the world like besides English to communicate with investors in their own languages, and hold 3-4 investment conferences a year in capitals of developed countries to provide our business leaders direct access to heads of MNCs. These investment conferences were also attended by senior leaders of capital exporting countries including their prime ministers which also provided an opportunity to our prime ministers to interact with counterparts in an informal and friendly environment. Since its wings were clipped by the ordinance 20years back, hardly has the BOI shown its face in foreign markets and Pakistan has disappeared from the investment map, until China launched its mega Belt and Road Initiative (BRI) and its CPEC component brought Chinese investment into the country.

No investment platform with such a laid-back approach has succeeded in any other country and it was certainly not the way it was originally designed and established in Pakistan in 1989 which, incidentally, was the first such investment platform created in South Asia. The success of the original framework could be seen from the fact that our BOI model was taken and used by other South Asian nations to set up similar investment platforms. And the fact that in a short period of time the BOI succeeded in bringing in more FDI into Pakistan than the total net inflows of loans obtained through the Aid-to-Pakistan Consortium proved the success of that model.

The original framework of the BOI was carefully designed by this writer in 1989 and was based upon findings of comparative studies of investment platforms of various countries during his studies at MIT. The proposal was submitted to then prime minister Benazir Bhutto, along with the fact that Pakistan had, until then, completely ignored accessing the flow of private capital and technology and was entirely dependent upon loans from various sources. She then constituted a committee of senior economic managers of the government comprising V A Jafri, A G N Kazi, Saeed Qureshi and Rafik Akhund, along with the writer to examine the proposal in detail. The committee held several meetings and then submitted its recommendations to the cabinet which approved them and the Board of Investment was created in Pakistan in February 1989.

Three main features of those recommendations which brought success to the BOI and Pakistan and remain relevant today are: (a) the BOI should be a robust, autonomous body providing a single window to investors and give them confidence that they have an effective facilitator and don’t have to go around in circles in government offices in pursuit of their investment proposal; (b) keeping in view the inter-agency nature of investment function, the BOI should not be placed under any line ministry but be an autonomous body working directly under president of the board — the prime minister — to ensure smooth implementation, overcome inter-ministerial rivalries and cut through the red tape; and (c) there should be only two tiers of scrutiny and decision-making for any investment project — the executive board at the BOI level where all issues are discussed and decided, except where special incentives or policy relaxation are involved; and the policy board at the PM level where issues of special incentives or policy relaxation are decided. All steps from beginning to end were to be completed within 90 days.

Prime Minister Imran Khan has been wanting to attract foreign capital and technology into Pakistan. Institutional support in the shape of a strong and powerful BOI working directly under him would go a long way in fulfilling his mission of turning around the economy of Pakistan and also put Pakistan back on the investment map of the world.

The writer designed the Board of Investment and the First Women’s Bank.

Email: [email protected]

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