Qatar and Kuwait have decided to make $4 billion new investment in Pakistan's power, hotel, insurance and oil refinery sectors, said minister for privatisation and investment Zahid Hamid.

"While Qatar is finalising arrangements to make up to $3 billion investment in hotel, power and insurance sectors, Kuwait is all set to establish a new oil refinery for which it has been offered land at two different places", he told a news conference on Saturday.

Similarly, he said the United Arab Emirates (UAE) was in the process of establishing an oil refinery in Pakistan to help export refined petroleum products after meeting certain domestic demand.

"We have received a very encouraging response from all the three governments for the early setting of their projects", Zahid Hamid said.

"Pakistan is attracting highest level of Foreign Direct Investment (FDI) and this is due to our highly attractive investment policy," he said adding deregulation, liberalisation and privatisation together with transparency, good governance and continuity and consistency, have helped attract foreign investment in this part of the world.

He said there was a record level of foreign investment in Pakistan during February 2007, totalling $1.15 billion. Out of this amount, FDI was $875 million and net portfolio investment was $274 million, he said.

He pointed out that the total foreign investment for the first eight months of the 2006-07 was $4.62 billion, comprising FDI amounting to $2.97 billion and net portfolio investment of $1.65 billion, including OGDCL's $731 million GDR receipts.

"Keeping in view the major privatisation transactions that have been planned for the remaining four months before the end of June 2007, including the sale of PSO and GDRs of UBL and Kapco, it is apparent that Pakistan will attain record new heights of foreign investment during 2006-07," he asserted.

Prime minister Shaukat Aziz, he said, believed that $5 billion foreign investment would be made during the current financial year. However, the minister said this FDI amount was going to be much higher eventually.

Answering a question, the minister for privatisation and investment said that the bulk of the FDI had gone into communications sector -- $1.28 billion (43 per cent). The financial business sector has received $573 million (19.3 per cent) and oil and gas exploration sector $353 million (11.9 per cent).

The US has invested $562 million (18.9 per cent) while the UK has made an investment of $547 million (18.4 per cent) and in both cases, "this is the highest level of investment ever. The UAE has invested $316 million or 10.6 per cent of the total."

"The perception about Pakistan is changing and that is why we are getting increased foreign investment," Zahid Hamid said.

He told a reporter that the government was not allowing privatisation of the country's strategic assets and the defence sector.

The minister clarified that although the there was a decision of the Council of Common Interests (CCI) taken in 1997 to also disinvest bigger state sector units, like Railways, PIA, etc, the government was not actively considering their privatisation.

Asked about the reasons of delays in the signing of a Bilateral Investment Treaty (BIT) with the US, Zahid Hamid said there involved certain legal issues which needed to be first sorted out between the two countries.

But he said talks between the two sides were continuing at a higher level to conclude the treaty soon.

He said that both the sides have decided to maintain "privacy and confidentially" about their talks over the issue of BIT.

The minister for privatisation and investment did not agree with a reporter that "inequality" was increasing in the Pakistan society. In this regard, Mr Hamid said poverty had reduced from 34 per cent to 24 per cent.

He said reforms have resulted in very impressive economic growth over the last seven years, with "dramatic improvement" in all major economic indicators which have completely transformed the economy and placed it on the path of rapid growth."

The minister said that the GDP growth rate has averaged more than 7.5 per cent during the last three years. Similarly, GDP per capita had doubled over the last seven years to $847 million and poverty has declined from 34 per cent in 2001 to under 24 per cent in 2006, he added.

He said that the government was making allout efforts to facilitate and encourage local and foreign investors and for this purpose it has formulated a liberal and attractive investment policy in consultation with businessmen, investors, chambers of commerce, trade associations, representatives of international companies and other stakeholders.

The minister said the government was providing a level-playing field to local and foreign investors and that all economic sectors were open to foreign investment. These foreign investors have been allowed up to 100 per cent foreign equity and no government permission is required.

He said attractive tax and tariff incentives packages have been offered to the foreign investors. "There is no restriction on remittances of capital, profit, royalties or fees."

A network of export processing zones and industrial estates has been made available to investors while statutory protection for foreign investment has been assured, apart from bilateral agreement, he said.
Reported by :  Ihtashamul Haque