During the last four years, foreign direct investment (FDI) has increased by five times. The government, during the same period, privatised 55 state owned enterprises, which brought billions of rupees and created immense employment opportunities in the country.

According to the State Bank of Pakistan (SBP), FDI had increased by 180.6 per cent along with the portfolio investment by 276 per cent bringing the total to US$407.4 million during the first nine months of FY 2006.

The government is putting more efforts to attract more investments in the country. For instance, there are plans of initiating three garment cities, each in Karachi, Faisalabad and Lahore where free premises will be provided to foreign investors for up to five years to enable them to start their businesses in ladies garments.

Moreover, the government has promised to provide land and infrastructure. This may prove to be a positive step because despite being the fourth largest cotton producer in the world, Pakistan has yet to make its mark as a major garment exporter although exports of high valued made-up textiles are steadily increasing.

The government has also identified sectors like information technology and telecommunications, engineering, construction, agro-based industries and oil and gas as potential areas of investment.

In all this, it must be mentioned that in today's world, overseas people are playing active roles in the development of their national economies. For instance, overseas Indians and Chinese are considered as key factors for their national economy booms.

China's economy is growing rapidly, and it is drawing on the talents of her foreign-educated and western-trained people and is attracting more FDI than any other country in the region. Most of the Chinese, who are returning to their homeland, are either joining multinational or state-owned companies or setting up their own enterprises. In fact, it is estimated that in the given situation, China would overtake Germany in the next four years and will also overtake Japan by 2015 and the US by 2039.

According to the IMF report (2004-05), the migrants annually send $50 to $60 billion to their home countries. Add to this $15 billion in various unreported ways and the number is an astonishing $75 billion.

As for Pakistan, the Asian Development Bank report claims that total expatriates of Pakistan have some $45-50 billion of foreign reserves in different parts of the world. Currently, Pakistan is expecting foreign exchange inflows of $3.5 billion in the current fiscal year largely from the investments of overseas Pakistanis.

Taken as a percentage of recipient countries' GDP, such remittances are significant making expatriates a potent force for economic growth.

A recent Canadian study found that, during the 1980s, a 10 per cent increase in the number of immigrants from a given country went with a 1 per cent rise in exports to a 3 per cent increase in imports from that country.

Keeping all these in mind, Prime Minister Shaukat Aziz has stressed the need to have a more structured, focused, friendly, functional and active Board of Investment (BOI) in the country. The BOIís function should be preparing an investment marketing plan identifying potential areas of investment, making country-specific plans and policies for different categories of investors as well as ensure that incentives provided by the government are timely.

It is predicted that operating as a one-window operation, the BOI can play a vitally important role in promoting investments in various sectors of the economy. The existing investment-friendly environment, continuation of economic policies and now the focused approach by the BOI should result in a larger inflow of investment. Some areas of investment outlined by various experts include:

* Consumer goods (home appliances)

* Call centres (emerging profitable business in the country)

* Information technology

* Cottage industries (cheap labour and chances of profitability is great)

* Small and medium scale industries (Huge potential for rapid growth)

* Health Care centres

* Small plants of CNG Kits

* Small units of floor, spices

* Biotechnology instruments

* Pharmacy

* Investment in industrial estate, exclusively meant for investment by the overseas Pakistanis

* Construction business

According to a report by Foreign Investment Advisory Service (FIAS) published recently, to start a business an investor has to devote 497 days, requiring 21 registration approvals, 15 at the federal and 9 at the provincial and local government levels.

An application for site development and issuance of associated permits requires one year, 11 steps, 61 documents, various secondary approvals and interface with no less than 15 authorities per city. As for getting utility connections, it takes 27 days to get a telephone connection, 50 days for gas, 45 days for power and 26 days for water and sewerage.

This is relatively higher than the amount of time consumed for such procedures in countries like Singapore and Thailand, which should be reduced up to international standards.

Conclusion

Pakistan may prove to be an ideal country for investments but to ensure that, several steps need to be taken. Business parks must be set up exclusively for this purpose and requirements like those of communications infrastructure, databases, banking, tax and legal opinion and so on should be improved.