Degree
Master of Business Administration
Faculty / School
Faculty of Business Administration (FBA)
Advisor
Dr. Mohammed Nishat
Committee Member 1
Dr. Muhammad Nishat, Professor, Department of Economics & Finance, Institute of Business Administration (IBA), Karachi
Project Type
MBA Research Project
Keywords
https://ir.iba.edu.pk/do/search/?q=FDI&start=0&context=8598587&facet=">FDI, UNCTAD, Trade Openness, Growth Forecast, Asian Development Bank, Corporate Tax Rates, GDP, Political Stability
Abstract / Summary
The research project, “Identifying Impediments and Factors for Boosting FDI Inflows to Pakistan”, was undertaken by Overseas Investment Chamber of Commerce Industries (OICCI) through graduate students of Institute of Business Administration (IBA). The project includes examining FDI inflow trends globally as well as regionally, identification of detrimental factors effecting FDI inflow in Pakistan, conducting qualitative analysis to gain insight on perceptions of foreign investors, conducting quantitative statistical analysis on available data, selected industrial analysis, policy-analysis of regional countries and recommendations.
Qualitative analysis included in-depth interviews with senior management of various foreign invested companies operational in Pakistan. The discussions highlighted the lack of long-term sustainability of policies in Pakistan. Furthermore, internal rifts between governmental institutes such as federal and provincial tax agencies coupled with lack of coherence and clarity in their operations has the investor perplexed. All organizations approached agreed upon Pakistan’s liberal FDI policies such as 100% ownership, 100% repatriation are one of the best in the region though there seems to quite a significant gap between what’s on paper and the practical execution of it.
Policy analysis of regional countries revealed the importance of one-window operation for taxations. Our regional counterparts, such as India and Vietnam, have dedicated investment portals with one-stop shop solutions for potential investors. Pakistan also has the highest number of tax payments in the region, more than twice to some of the regional countries, while most of its counterparts have reduced their payments over the past 15 years, inching closer to single digits. Moreover, it was observed that Pakistan lacks a basic blue-print layout for the agencies one would have to contact for bringing in foreign investments. While Pakistan’s policy framework appears to be much more liberal and incentivizing to prospect investors relative to other countries within the region, it still fails to improve the abysmal FDI situation at hand.
Our recommendations after thorough analysis and tests include harmonizing policies amongst Provincial and Federal institutions. The tax rate coupled with the number of taxes should be brought down to be in line with the regional average. Pakistan needs to focus beyond import substitution and work toward becoming part of the global value chain, improving its trade/GDP ratio. Finally, the high causal relationship between Political Stability and FDI inflows suggests there is a dire need to improve our score on the Governance Index by improving the investor perception.
Recommended Citation
Akhter, M. B., Khan, M. S., Faiyaz, M. A., & Ijaz, M. U. (2019). Boosting FDI inflows in Pakistan (Unpublished graduate research project). Institute of Business Administration, Pakistan. Retrieved from https://ir.iba.edu.pk/research-projects-mba/231
