Islamabad:
Pakistan said on Tuesday that its Special Investment Facilitation Council (SIFC) hopes for a $70 billion investment were backed by foreign assurances, but acknowledged that those deals would take time due to geopolitical and trade reasons.
Jahanzeb Khan, Secretary of the SIFC summit committee, also revealed that financial advisers had finalized the valuation of the Reko Diq copper and gold mines and discussions with Saudi Arabia on the details of its investment in the project would take place soon.
“The $70 billion is not an abstract figure as it has been backed by assurances from other countries,” said Khan, who is also the vice-chairman of the Planning Commission.
It was the first briefing to media persons on the functioning of the SIFC, chaired by the Prime Minister along with the Chief of Army Staff.
Khan said the country had promised to make an investment of $25 billion through its sovereign wealth fund, but it would take time for the investment to materialize.
The $70 billion investment will come mainly from private investors, and foreign government-led investment will be through sovereign wealth funds, he clarified.
Investment will start flowing when there is an overall improvement in the situation and foreign investors complete the review of certain policies, including the green investment policy, Khan said.
“This is an extraordinary situation as the economic challenges are of a very serious nature,” the secretary said.
Former prime minister Shehbaz Sharif had set up the council in June this year on the advice of the army chief, who raised concerns about the role of the military in economic affairs.
To a question, the minister said there were concerns that the war in Gaza would have an impact on the Gulf countries’ investment commitments, but “we have not yet analyzed the exact impact”. Now, the investment will take longer to materialize because of the war, he added.
Pakistan had hoped to receive $6 billion to $7 billion in Saudi investment in the Reko Diq project, but no tangible progress has been made so far.
Investment Reko Diq
Khan said financial advisers had almost completed the valuation of the gold and copper mines. “Our desire was for Saudi Arabia to invest in an adjacent section of the Reko Diq mines, but the kingdom only wants to invest in the existing section where Barrick Gold and Pakistan are equal partners.”
He said the evaluation of the existing block was almost complete and after that the details of the Saudi investment would be finalised.
“We have valued our shares and we believe Barrick Gold should also reduce its shares as it is in everyone’s interest for Saudi Arabia to invest in the Reko Diq mines,” Khan said in response to a question about Barrick’s concerns. Gold.
A third party had been engaged to assess the Reko Diq mines and it was hoped that the exercise would be completed well before the December 25 deadline, Khan said.
“We want to make this deal clean so it can be used as a benchmark, but we will not sell our shares at dump prices,” he said, adding that the country’s national interests would be protected. Khan also faced questions about the military’s role in economic decision-making.
“We want to take advantage of the military’s capacity in the fields of agriculture and information technology where they have worked well. Investors working in the mineral sector need security, which only the military can provide,” he said while justifying the presence of the military at SIFC.
The military has developed national capabilities to develop agricultural farms and IT networks, he added.
Reading: Investment wanted in Reko Diq
Right now, according to Khan, Saudi Arabia is reviewing the green field investment policy and once the Saudis clear it, it will be easy to invest in the oil refinery. He said that investments in solar power plants are linked to the solar tariffs to be set by Nepra.
design: Ibrahim Yahya
Poor SIFC performance
In its first five months, SIFC has not brought in a single dollar worth of new investment.
“Whatever SIFC has achieved so far, it could not have been done in the last many years,” Khan pointed out while citing 12 decisions taken and implemented by SIFC so far.
SIFC has facilitated the approval of the uniform right-of-way fee policy, the national framework for sharing telecommunication infrastructure, the advisory committee for the auction of telecommunication licenses, the land information management system, a solar power plant project, 1,000 acres of land for cultivation in South Waziristan and a visa policy.
SIFC also facilitated increase in export earnings limit to 50% for IT sector, issuance of foreign currency debit cards for overseas payments, digital self-employed accounts, 202 MW Rashakai power project and 1 MW solar power project in Gilgit-Baltistan.
However, the decisions taken by the SIFC so far should have been taken by the Economic Coordination Committee (ECC) or the concerned ministries. The secretary also faced questions over concerns that the SIFC had become inactive when an elected government was put in place.
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“I am sure the army will advise the next government to use the SIFC platform to bring in foreign investment,” Khan said. “The SIFC Act will remain, but how the new government uses it is up to them.”
The concerns of the IMF
A day earlier, Khan also briefed the IMF on the role and functions of the SIFC and sought to address its concerns.
“The IMF wants there to be an element of transparency and accountability in the functioning of the SIFC,” the secretary said. The IMF’s concerns were not about the existence of the SIFC but about any preferential treatment the body might give to investors, he added.
The IMF also raised questions about sales distortions and duplication of work by various government agencies, he said. He asked about the need to set up the SIFC when there were other departments performing the same functions.
Jahanzeb said the IMF seemed satisfied with the explanation. “SIFC is not an institution, but an intervention body for other institutions to function,” he added.
Published in The Express Tribune, November 15u2023.
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