BEIJING, July 26 (INP): Pakistan needs to streamline its business environment to overcome certain economic shortfalls in wake of COVID-19 and to achieve future socio-economic targets, particularly in term of China-Pakistan Economic Corridor (CPEC).   

Streamline the regulatory environment for business is also imperative for both Pakistan and China, said Chinese scholar Prof. Zhou Rong in an article published by China Economic Net (CEN) on Sunday. 

He note that the Foreign direct investment (FDI) in Pakistan was 10% lower than the $133.2 million recorded in April 2020 and 53% lesser than the $254 million registered in May 2019, as Covid-19 forced global investors to put their new investment plans on hold. The global lock-down imposed to contain the virus badly impacted economic activities, businesses, people's income and their purchasing power. As a result, the demand in international markets for many Pakistani products, except for food and pharmaceuticals, dropped sharply.  

According to Prof. Zhou Rong who is special commentator of CEN and senior Fellow of Chongyang Institute for Financial Study of Renmin University, most of the foreign investment during the Covid-19 pandemic went to the ongoing projects in Pakistan rather than new projects. The overall 91% growth in FDI got major support from an increase in Chinese investment, mainly in power projects under the frame of CPEC. In the first 11 months of FY20, China was the largest investor with net investment of $855.6 million. As about the sectors investment, the communication sector, mostly the 3G/4G service providers, attracted the largest foreign investment of $73.5 million in May 2020, followed by oil and gas exploration firms $18.6 million and financial businesses $15.5 million. He noted that the flow of foreign investment in future depends on the unfolding Covid-19-related events like the second and third waves of infections, controlling the crisis and introducing the much-awaited vaccine. The return of stability to the financial health of global firms is a must to attract new foreign investment in Pakistan and also Pakistan’s ability to absorb FDI. Now, to attract FDI more effectively, the Pakistani government is all set to comply with the WTO provisions to implement Pakistan Single Window (PSW) to streamline cross-border movement of goods and regulatory bottlenecks, and the government has set a deadline of 2022 to put in place the whole system which will be implemented at a cost of $67 million.  

This will not only improve the ease of doing business, but also enhance controls through integrated risk management. According to customs, the PSW will establish, maintain and expand ICT-based NSW platform, Port Community System, Trade Inform¬ation Portal, Integrated Risk Management and Unified Registration, etc. The PSW companies will work on a cost-recovery model without burdening the government while being accountable for the product rollout. The services sector has critical importance for any vibrant economy; however, several steps are needed to tap true potential of sectors in Pakistan. Indeed, the services sector of Pakistan was facing hurdles to growth due to difficult access to business premises. The Pakistani government would soon agree on a trade-in-services agreement with China to curb costs for Pakistani firms interested in integrating with the Chinese services sector, and work on services sector-focused economic zones under the CPEC would be established, otherwise, some foreign enterprises even the Chinese ones were willing to relocate due to high labour costs. 

Information technology parks can help promote IT-enabled businesses, which are much desired by the Chinese companies. Pakistan would like to see businesses, applying for loan, secure their future cash flows. Pakistan needs to be more receptive to joint venture and foreign investors.