By Abdul Wajid Khan ISLAMABAD, March 04 (INP-WealthPk) A noted economist has urged the government to take concrete steps for the provision of maximum facilities to investors to increase the foreign direct investment (FDI). Talking to WealthPK, Dr Abdul Jalil, senior researcher and professor of economics at the Pakistan Institute of Development Economics (PIDE), said given the prevailing economic situation, Pakistan is in dire need of maximum FDI to support its economy for sustainable growth. He said Pakistan's domestic and foreign direct investment was continuously stagnant. “Pakistan’s domestic investment is stagnant at around 12 to 15% of the gross domestic product (GDP) which is amongst the lowest in the world. Currently, Pakistan requires domestic investment of around 30% of the GDP to fulfil its needs. As for the FDI, it has always been stumbling and fluctuating. Pakistan has never succeeded in attracting the required level of FDI. The current volume of FDI is very low, while Pakistan needs much more to enhance it”, he said. Dr. Jalil, who currently holds the additional charge of Executive Director Centre of Excellence China Pakistan Economic Corridor (CPEC) at the Ministry of Planning and Development, said the government needs to take pragmatic steps to ensure smooth running of businesses because only businesses could increase exports. “When local businessmen prefer to invest abroad, then who will come from abroad to invest in Pakistan? They prefer to invest in foreign countries to earn more profits by utilizing better investment opportunities. They benefit from a better enabling business environment there. Without an enabling environment to the investors, why international investors will invest here?”, he told WealthPk. Dr. Jalil said although Pakistan was taking steps for improvement of its ranking regarding the ease of doing business, it still needed more efforts to further improve it and create an enabling environment. ‘’Pakistan needs to remove all the barriers and resolve issues to facilitate foreign direct investment,’’ he suggested. According to the World Bank’s Doing Business 2020 report, Pakistan improved its global ranking by 28 notches from 136 to 108 and was declared the top reformer in South Asia and sixth globally. “If there is any uncertainty and instability in the market, then no one will be ready to invest even if the rate of return is high. Pakistan started establishing industrial zones during 1960s but its experience in setting up of these industrial zones for industrialisation could not produce tangible results”, he added. Unless issues are settled at the indigenous level, no one from abroad can help resolve these issues, he said. Dr. Jalil said the industrial zones under the CPEC provide great potential to Pakistan to strengthen its industry but Pakistan still needs to settle all relevant issues to attract FDI. “We need to create opportunities for investors to invest and earn profit. If there is no enabling business environment, then no investor will come to Pakistan for investment. Investors will prefer to invest where there is certainty, an opportunity of good rate of return and an enabling business environment”, he concluded. According to the latest economic outlook report of the Ministry of Finance, in Jul-Dec of the ongoing financial year, FDI increased by 20.1% to $1,056.6 million from $879.7 million during the same period last year. FDI received from China is $306.7 million (29.0 percent of total FDI), United States $149.3 million (14.1 percent), the Netherlands $124.5 million (11.8 percent) and the United Arab Emirates $66.4million (6.3 percent). The power sector attracted the highest FDI of $363.7 million (34.4 percent of total FDI), financial business $205.7 million (19.5 percent), communication $146.5 million (13.9 percent) and oil & gas exploration $146.1 million (13.8 percent). These figures suggest that the current volume of FDI in the manufacturing sector is negligible. A research study conducted by the PIDE suggested that the policymakers should increase their focus on attracting FDI in manufacturing and services sectors in order to attain economic growth. It added that in the manufacturing sector, FDI inflow was relatively small; especially the textile sector has received meagre FDI inflows. Pakistan has received little export-oriented FDI and hence there is a limited role of FDI in export promotion. Also, the Asian Development Bank (ADB) in its recent report highlighted that the investment potential of the Pakistani diaspora was estimated to be around $4 billion–$5 billion annually. Estimates of the annual combined wages of the Pakistani diaspora were around $52 billion or around 20% of Pakistan’s GDP in 2015. According to the ADB, Pakistan needs to put in place appropriate policies and initiatives in order to involve its diaspora in the mainstream capital market and mobilize their income and wealth into productive investment vehicles in the form of innovative financing for beneficial projects in the country. Analysts believe that the CPEC, which has already entered its second phase, provides great opportunities to attract FDI in the manufacturing sector to modernise the industry. The major focus in the current phase of the CPEC is on boosting the manufacturing and industrial sector.