The ambitions of Special Investment Facilitation Council (SIFC) are expected to increase Foreign Direct Investment (FDI) inflows, promote modern agriculture, diversify the information technology sector, revive mining projects, and empower the energy sector based on renewable energy resources while encouraging the youth to show active participation in these initiatives.
Pakistan's economy has experienced fluctuations, witnessing both periods of growth and decline. It has flourished during optimistic phases and faced challenges during periods of pessimism. The economy is regarded as the backbone of the country, shaping its strength and potential. A nation's global standing and opportunities for international engagement are closely tied to its economic performance. Various internal and external factors contribute to economic contractions in countries like Pakistan. External factors include an exchange rate crisis, decreasing Foreign Direct Investment (FDI), declining exports, and the impact of International Monetary Fund (IMF) policies. On the other hand, internal factors encompass issues like trade and fiscal deficits, a low gross domestic product (GDP) ratio, inadequate taxation practices, high inflation, an informal economy, energy shortages, declining agricultural yields, rapid population growth, and the financial struggles of state-owned enterprises (SOEs).
To gain a deeper understanding of these economic issues, it is crucial to analyze them through an economic lens to formulate evidence-based policies. As per the economic survey report for 2022-2023, the current fiscal deficit stands at PKR 3,929.3 billion, leading to a financial crisis. Tax revenues (federal and provincial) experienced a growth of 16.5 percent, primarily driven by a substantial increase in Federal Board of Revenue (FBR) tax collection, despite various economic challenges at domestic and global levels. The total tax collection rose to PKR 5,617.7 billion in the July-March Fiscal Year (FY) 2023, compared to PKR 4,821.9 billion in the corresponding period of 2022.
How SIFC is Poised to Revitalize Pakistan's Economy
SIFC is an initiative Pakistan's government took to revive the country's economy. The council will provide services to all foreign investors interested in Pakistan. It will ensure facilitation and procedures for all stakeholders without any intervention or interference. SIFC aims to attract mammoth FDI of USD 100 billion in the short span of three years in Pakistan. For this, SIFC is strengthening ties with the Gulf Cooperation Council (GCC) countries because they have immense potential for investment. In this way, SIFC aims to attain a gross GDP of USD 1 trillion by FY35. Furthermore, this will also bring about a transformation in Pakistan's four major economic-contributing sectors: Agriculture, Energy, Mining, and Information Technology (IT).
The Prime Minister leads the SIFC with the assistance of the Chief of the Army Staff (COAS). The primary goals of SIFC include achieving self-sufficiency and independence across all sectors, enhancing export potential, decreasing Pakistan's trade deficit, and portraying a positive economic image globally.
Pakistan's initial Green Revolution took place under Ayub Khan's regime in the mid-1960s. During this period, food grain production tripled, attributed to the introduction of chemical fertilizers, irrigation water, high-yielding variety seeds, and innovative technology. Notably, Pakistan's wheat output surged by 79 percent, rising from 3.7 to 6.8 million metric tons (MMT), surpassing other South Asian regions.
SIFC aims to attract mammoth FDI of USD 100 billion in the short span of three years in Pakistan. For this, SIFC is strengthening ties with the Gulf Cooperation Council (GCC) countries because they have immense potential for investment. In this way, SIFC aims to attain a gross GDP of USD 1 trillion by FY35.
Pakistan's agricultural economy has enormous resource potential but poses multiple challenges, such as outdated farming methods, depleting water resources, and the lack of advanced technology. To address these challenges, the Second Green Initiative is undertaken by the Land Information and Management System–Centre of Excellence (LIMS-COE) under the umbrella of SIFC. The vision of SIFC is to animate and modernize agriculture practices; therefore, it has adopted the latest and advanced technological tools to monitor and control agriculture practices to increase crop yield. A major milestone during the cotton season 2023 was achieved when the LIMS' automated pest track and control system detected a whitefly attack in southern Punjab. Timely reporting and actions led to its mitigation and repulsing of the attack. Due to this timely action, the cotton crop observed a significant rise of 126 percent in its annual yield.
According to the Project Director of LIMS-COE, "LIMS is using the latest technologies for cultivation and harvesting through satellite and drone-based monitoring systems under the supervision of highly qualified and experienced agronomists and GIS (Geographic Information Systems) specialists to utilize the available resources efficiently. It aims to introduce best farming practices at different levels and contribute to the overall expansion of agriculture in Pakistan through precision agriculture.”
LIMS identified nearly 4.4 million acres, with Punjab and Sindh possessing 1.3 million acres each. In contrast, Khyber Pakhtunkhwa (KP) has 1.1 million acres, and Balochistan holds 0.7 million acres of land classified as cultivable waste, presenting significant potential for efficient utilization in agricultural development.
According to the World Food Program, 36.9 percent of Pakistan's total population is grappling with a food crisis, with 18.3 percent facing acute food insecurity. The increasing population, coupled with a high growth rate, cannot be adequately met by the annual wheat crop output. The issue of wheat shortage is exacerbating due to the total demand exceeding 30.8 MMT, leading to a current shortfall of 4 MMT, as the output stands at 26.4 MMT. LIMS is committed to implementing state-of-the-art corporate farming techniques to ensure food security.
To maximize the IT industry's potential, Pakistan's government is also keen to improve the IT ecosystem. The ultimate objective of the plan is to reach the set target of GDP growth up to USD 1 trillion in FY35, which can be achieved. This plan incorporates the talented youth of the country which provides exponential possibilities for growth and development in the IT and agriculture sectors.
Pakistan stands as the second-largest hub for freelancing in software development and technology, where Pakistani youth play a pivotal role, contributing to the increase in foreign remittances. The country boasts over 600,000 IT professionals comprising mainly the youth, with an annual influx of more than 40,000 young IT graduates. The presence of 253 IT universities underscores the substantial potential of the IT industry in Pakistan. The Chairman of the Pakistan Software Houses Association said, "Pakistan is a land of opportunities. Our innovation potential is huge, and we have high hopes that SIFC will introduce necessary policy reforms, which are crucial for the growth of economy and youth together."
A major milestone during the cotton season 2023 was achieved when the LIMS' automated pest track and control system detected a whitefly attack in southern Punjab. Timely reporting and actions led to its mitigation and repulsing of the attack. Due to this timely action, the cotton crop observed a significant rise of 126 percent in its annual yield.
Caretaker Federal Minister for Information Technology and Telecommunication, Dr. Umar Saif, expressed the hope that allowing IT companies to retain 50 percent of their exports and proceeds in special foreign currency accounts will increase IT exports to USD 4 billion. This groundbreaking move fulfills a longstanding demand in the IT sector and underscores Dr. Saif’s unwavering commitment to the IT industry. The decision to allow IT companies to retain up to 35 percent of their export revenues in foreign currency accounts is a significant step towards improving the efficiency of financial operations, expanding the industry's potential, and encouraging the youth to work more diligently towards progress and development.
Pakistan is blessed with vast reserves of minerals covering an outcrop area of 600,000 square kilometers. Despite its enormous potential, the mining sector contributes less than one percent of Pakistan's GDP. SIFC has devised a plan to unlock Pakistan's mineral potential to overcome these challenges and hurdles.
Reko Diq, one of the most significant undeveloped copper-gold prospects globally, is owned 50 percent by Barrick, 25 percent by three federal state-owned businesses, 15 percent entirely funded by the province of Balochistan, and 10 percent free carried by the province of Balochistan. The reconfiguration of the project into a world-class, long-life mine, completed in December 2022, is set to substantially enhance Barrick's strategically significant copper portfolio and provide benefits for Pakistani stakeholders for generations to come. Currently, Barrick is in the process of updating the project's feasibility and expansion studies from 2010 and 2011, with the aim of completion by 2024 and the anticipation of the first production in 2028.
The development of Balochistan is anticipated to be significantly impacted by Reko Diq and emerge as a significant contributor to Pakistan's economy that will create jobs–mainly for the young graduates, foster the expansion of a regional economy, and fund development initiatives. Balochistan will get the dividends, royalties, and other advantages of its 25 percent participation in the mine without having to make any financial contributions to its development or operation because the province will completely fund its interest.
The Power Division has received instructions from the Executive Committee of the SIFC to review all hydropower projects in the LoI stage from different provinces, such as Kalam-Asrit 238 MW (megawatt), Asrit-Kedam 229 MW, and Lower Spatgah 470 MW, to streamline their issues and policy parameters in the working group.
The Korean company had requested Secretary Power's intervention for Private Power and Infrastructure Board (PPIB) to issue a Tripartite Letter of Support (TLOS) under the Power Generation Policy 2015 by June 30, 2023. This would allow the projects to fulfill their deadlines for achieving COD by July 2029 in the Indicative Generation Capacity Expansion Plan (IGCEP)-2022-2031 and to take advantage of the income tax exemption that would otherwise expire on that date. In addition, M/s KHNP (Korea Hydro and Nuclear Power), which plans to build a 470 MW Lower Spatgah, has applied for tariff determination at several forums, including SIFC and National Electric Power Regulatory Authority (NEPRA).
In summary, the initiative led by the Government of Pakistan, with the support of COAS, is poised to pave the way for economic success. The SIFC aims to boost FDI inflows, advance modern agriculture, diversify the information technology sector, rejuvenate mining projects, and strengthen the renewable energy-based energy sector. The Pakistani youth has a pivotal role to play in this initiative, which ensures not only progress and income for them but also contributes to the national exchequer.
Prioritizing the exploration and development of these resources is crucial for Pakistan's economy to achieve self-sufficiency, foster economic growth, and reduce imports. While sustainable economic growth in Pakistan poses challenges, it is achievable through the establishment of a robust regulatory framework, adherence to the rule of law, fiscal health, and a business-friendly climate.
The writer is a freelancer.