Just a few months ago, Pakistan’s economy was on the rocks due to the soaring dollar rate and critically low dollar reserves. There was a widespread belief that the country was on the brink of default. However, the government implemented some measures, signed a deal with the International Monetary Fund (IMF), and launched the Special Investment Facilitation Council (SIFC) to attract foreign direct investment.
SIFC, a civil-military initiative, has yielded promising results within a short span because of its investment-friendly environment facilitated by a one-window operation. In November 2023, Pakistan and the United Arab Emirates (UAE) signed several Memoranda of Understanding (MoUs) for multi-billion dollar investments in diverse initiatives outlined by SIFC.
With critically low forex reserves, the government realised the need for expediting processes for bringing foreign investments. Previously, silo-working ministries, fragmentation between the federation and provinces, and turnarounds in policies badly hurt businesses and were major hurdles in the economic growth of the country. Hence, the SIFC was launched in June 2023.
The government devised a strategy to attract investments from Gulf countries, particularly, Saudi Arabia, Qatar, and UAE. The then Prime Minister Shehbaz Sharif endorsed the establishment of the SIFC, while the Land Information and Management System (LIMS) emerged as a joint project between the government and the army, designed to modernise the agricultural sector and foster its evolution.
A notification issued on 17 June 2023 from then Prime Minister Shehbaz Sharif’s Office said SIFC would seek investments in the energy, IT, minerals, defence, and agriculture sectors from Gulf Cooperation Council (GCC) countries. The body, which has the army chief and other military leaders in key roles, aims to take a “unified approach” to steer the country out of economic crisis.
The main objective of the initiative is to deal with the concerns of Gulf investors on policy continuity and provide a one-window solution to them, as experts believe that these two factors often create hurdles in attracting foreign direct investment (FDI) inflows. The SIFC prioritises several sectors in order to attract $100 billion in FDI within three years. The goal is to achieve a nominal GDP of $1 trillion by 2035.
Through the council, Pakistan is not only looking for direct Gulf investment but also hopes to sell public-sector assets and state-owned businesses to Arab investors, and is in the process of transferring assets worth over Rs2.3tr to the recently formed Pakistan Sovereign Wealth Fund for privatising or leasing those enterprises. A Karachi port terminal has already been leased to the Emiratis.
Pakistan Software Houses Association (P@SHA) Chairman Muhammad Zohaib Khan described the creation of the SIFC as a significant development for foreign direct investment in Pakistan as it has the potential to bring about transformative changes in the economy.
SIFC, a civil-military initiative, has yielded promising results within a short span because of its investment-friendly environment facilitated by a one-window operation.
How does SIFC work?
The SIFC serves as a ‘single window’ for multi-domain cooperation in various fields with GCC countries and other countries in general to facilitate investment. The SIFC consist of three tiers, including a six-member Apex Committee chaired by the prime minister. The Executive Committee has eight members, including representatives from the Pakistan Army.
The council has the authority to call regulatory bodies, government divisions, or representatives when delays in obtaining necessary licenses, certificates, or permits create problems in investment operations and damage an investor’s confidence.
Based on the SIFC’s recommendations, the federal government can issue notifications in the official gazette to relax or exempt regulatory requirements for projects, transactions, arrangements, and agreements.
From November 5th to 7th, SIFC successfully hosted an investment roadshow in Dubai in collaboration with USAID. The primary objective was to spotlight the latent potential of Pakistan and cultivate global investments in key sectors of the economy. Approximately 30 Pakistani firms actively participated, presenting their proposals and growth strategies in dedicated B2B pitch sessions across diverse areas such as agriculture, IT, and energy.
On 27 November, Pakistan and the UAE signed several Memoranda of Understanding (MoUs) in Abu Dhabi for multi-billion dollar investments in various initiatives. After the signing ceremony, Caretaker Prime Minister Anwaar-ul-Haq Kakar and UAE President Sheikh Mohammed bin Zayed Al Nahyan also held a bilateral meeting.
According to a handout released by the media wing of the Prime Minister’s Office and the Information Ministry, the investment cooperation will be across several sectors, including energy, port operations, wastewater treatment, food security, logistics, mining, aviation, and banking and financial services.
Land Information and Management System (LIMS)
In September 2023, the civil and military leaders joined hands to tackle food insecurity, malnutrition, and soaring import costs of the agriculture sector. The solution of the then Prime Minister Shehbaz Sharif and Chief of Army Staff (COAS) General Asim Munir came in the form of the Land Information and Management System – Centre of Excellence (LIMS-COE).
As per a statement issued by the PM Office, “Establishment of LIMS is the first exceptional initiative, aimed at enhancing food security and improving agri exports thus reducing import burden on the national exchequer. The initiative would help transform millions of acres of uncultivated or low-yield land within the country.”
“This state-of-the-art system will help optimise the agricultural production through innovative technologies and sustainable precision agricultural practices based on the agroecological potential of land,” the statement said, adding that the system would ensure the well-being of rural communities and the preservation of the environment.
According to the World Food Programme, 36.9 per cent of Pakistanis were food insecure and 18.3 per cent of these were facing severe food crises.
It is believed that the LIMS-COE initiative is bigger than the China-Pakistan Economic Corridor (CPEC) and will address the nation’s continued struggle with growth. Experts believe that LIMS will establish direct market connectivity for farmers and enable them to connect with buyers and access lucrative opportunities. By utilising modern technologies and techniques on currently unproductive or underutilised agricultural lands, the system will facilitate increased agricultural production, contributing to the overall growth of the sector.
SIFC and agri sector
Pakistan is in dire need of foreign direct investment to improve its foreign exchange reserves and to bridge the investment gap the country is currently experiencing. The agriculture sector has gained prominence among the sectors with significant potential for foreign direct investment. Such investments are crucial to boost its agricultural and industrial production, which can lead to job creation, increased exports, and the generation of additional tax revenues.
Under the banner of LIMS, numerous modern farming projects have been launched, encompassing a total area of 4.4 million acres. These projects are distributed across different provinces, with 1.3 million acres in Punjab, 1.3 million in Sindh, 1.1 million in Khyber Pakhtunkhwa, and 0.7 million in Balochistan. The project entails the construction of new canals and the adoption of modern irrigation techniques such as drip, sprinkler, and circular irrigation.
While SIFC and LIMS are important initiatives to explore Pakistan’s untapped potential in various sectors, relying on Gulf states alone for investment may be limiting. There is a need to expand the operations of SIFC to other countries and regions, which can diversify our FDI portfolio.
The writer is a dairy value chain expert.