Special Investment Facilitation Council (SIFC)

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Special Investment Facilitation Council (SIFC)

Muhammad Sheraz

The Government of Pakistan has recently taken a remarkable step towards improving the country’s economic situation: the establishment of the Special Investment Facilitation Council (SIFC) which aims to streamline the process for foreign direct investment by routing it through a one-window operation under one roof. The SIFC will focus on defence production, agriculture, mines and minerals, IT and energy sectors, with a target of achieving $100 billion in FDI within three years. The ultimate goal is to achieve a $1 trillion GDP level by 2035. Security agencies will take an active part in cross-frontier operational management to ensure the success of this ambitious plan.

In June, the federal government unveiled an elaborate Economic Revival Plan in the wake of economic hardships being faced by Pakistan. The plan envisages capitalizing Pakistan’s untapped potential in key sectors of defence production, agriculture, livestock, minerals, mining, IT and energy, through indigenous development as well as investments from friendly countries.
To fast-track the development of projects, the Special Investment Facilitation Council (SIFC) has been established to act as a single-window interface for potential investors as well as to adopt a unified approach. “Employing a whole-of-the-the-government approach, the coalition government has decided to set up a Special Investment Facilitation Council (SIFC) with a mandate to frame economic policies that ensure policy predictability, continuity and effective implementation to revive the economy”, the prime minister said in a tweet.
The SIFC will include key figures from both the government and the armed forces, and it will consist of apex, executive and implementation committees. The military will have a significant role in the new body, with the army chief being a member of its apex committee and the army itself serving as the national coordinator for both the apex and executive committees. An army official will also be the director general of the body’s implementation committee.
1. Apex Committee: Prime Minister Shehbaz Sharif and Army Chief General Asim Munir will be a part of the Apex Committee. Federal Ministers will also be included in the Apex Committee and its meeting will be held on a monthly basis.
2. Implementation Committee: An implementation committee of the Council has also been formed which will meet every week. The implementation committee will be led by Special Assistant to Prime Minister.
3. Executive Committee: The Executive Committee of SIFC has also been formed. Minister for Planning will lead the committee and the ministers for defence, petroleum, and IT will be part of it. Provincial chief secretaries, secretary Board of Investment, and secretaries of provincial ministries will also be part of the Executive Committee.
By integrating the expertise and resources of both civilian and military leadership, the SIFC aims to consolidate its status as a formidable force in attracting investments.
SIFC is designed to leverage the collective strengths and expertise of both the civil and military sectors in Pakistan. By presenting a united front to potential investors, SIFC strives to instil confidence and showcase a shared commitment to sustainable economic growth. This collaborative approach aims to attract investments and promote the long-term development of the country, ensuring a prosperous future for Pakistan.
The stated objectives of the SIFC are to address the type of issues that prevented Saudi Arabia, Qatar, the UAE, Malaysia, etc. from executing their MOUs on investment in Pakistan. It will also help adopt a coordinated and collaborative approach among the federal and provincial governments and other stakeholders to ensure timely decision-making, resource allocation and project implementation to improve the ease of doing business. It will provide much-needed assurance on policy consistency and continuity to our development partners.
The SIFC will prioritize defense production, agriculture, mines and minerals, energy and the IT industry, with the ambitious target of attracting $100 billion in FDI within three years. It will work to achieve the goal of having a nominal GDP of $1 trillion by fiscal year 2035. The state apparatus will provide comprehensive technical and strategic support to ensure the seamless functioning of the Council.
The setup will shorten heretofore cumbersome and lengthy business processes through a cooperative and collaborative ‘whole-of-the-government’ approach with representation of all stakeholders. It is aimed at creating horizontal-vertical synergy between federation and provinces; facilitating timely decision-making; avoiding duplication of effort; and ensuring swift project implementation.
Since the plan is fundamental to the socio-economic prosperity of Pakistanis and reclaiming Pakistan’s rightful stature in the comity of nations, Pak Army will also lend its all-out support to complement the government’s efforts for Economic Revival Plan.
Concerns
There are potent apprehensions about the formation of SIFC.
First, it is the job of the civil and military bureaucracy to make available to the disposal of elected governments their knowledge and expertise for making and implementing required policies. For civil servants, the field could be as vast as economics, law, administration, or process knowledge and skills. For the military, this would essentially be skills and expertise in security and defence.
Given the de-facto enlarged role, this may also include bilateral and international relationship management. But to make its expertise available and for elected governments to avail it, newer, supra-constitutional and supra-legal entities are not needed.
Contrary to the objective of ‘fast tracking’, such forums and bodies add unnecessary and cumbersome layers of bureaucratic procedures, undermine existing constitutional and legal forums that have a well-established system of parliamentary oversight, and diminish and take away institutional capacity from its original focus.
Second, care and caution must be at play in both elected governments and the bureaucracy not to confuse ‘functional loyalty’ through the availability of expertise and knowledge, with ‘political loyalty’. It is a dangerous phenomenon at any time but a minefield in prevailing public perceptions.
Potential benefits
The SIFC has carefully identified key sectors with enormous potential for economic growth. Agriculture, energy, information technology (IT), mining and resource extraction, and defence manufacturing are some of these sectors.
SIFC has a number of essential elements. First, it entails impact investment, which involves allocating capital to businesses with quantifiable goals of generating a good social or environmental impact.
Second, ESG integration mixes social and environmental considerations into financial analyses to help investors make better investment choices.
Thirdly, shareholder advocacy urges investors to use their power to influence businesses for the better.
Finally, sustainable banking and finance encourage financial firms to embrace sustainable practices. Foreign investors now have more flexibility in choosing the locations of their investments because of this improved accessibility.
Additionally, investors can now transfer their profits in any currency of their choice, which makes it easier to remove money from Pakistan, if necessary.
The lifting of restrictions on selling or leasing land to foreign investors is another noteworthy achievement. They now have an easier time acquiring land for their businesses, especially those involved in real estate. There are greater prospects for foreign investors in this industry now that foreign developers can comfortably invest in Pakistan’s real estate market.
Additionally, foreign investors can now hold 100% of corporate agriculture farms and 60% of agricultural projects, allowing them to fully participate in the agriculture sector.
The IT sector is included in the mandate of SIFC, it is one of the few sectors in Pakistan that can play a key role in the economic survival and recovery of Pakistan. Reforms in such areas are very necessary and will have far-reaching results.
Analysis
The establishment of SIFC is definitely a breath of fresh air for the Pakistani economy which is surrounded by economic and other crises. The realization that SIFC will be a permanent one-window operation aimed at removing all obstacles and bureaucratic red tape is what distinguishes the effort from others. By demonstrating a commitment to an honest and transparent process, the military leadership is taking a vital step forward in rebuilding the nation’s economy. SIFC seeks to address essential procedural concerns, facilitate policy reforms and create an environment that is friendly for investors by channeling foreign investment into certain industries. The agricultural sector in Pakistan is essential to the nation’s economy. However, it faces many difficulties, including outmoded farming methods, lack of water and of technical developments. The SIFC’s emphasis on agriculture demonstrates its commitment to addressing these issues and luring foreign capital to modernize the industry, boost productivity and improve export capabilities. The energy industry is essential to the prosperity of any country. Despite recent progress, Pakistan still has problems with a lack of energy and an over-reliance on fossil resources. The purpose of SIFC’s involvement in this industry is to draw foreign capital into the region in order to assist renewable energy initiatives, advance energy efficiency and improve the nation’s energy infrastructure. IT industry has emerged as a key factor in global economic expansion. Although Pakistan has a great pool of IT workers, the industry struggles with issues including poor infrastructure and restricted access to financing. The SIFC is concentrating on IT because it recognizes that it has the potential to be a driver of economic growth. It wants to draw foreign investment to promote innovation, upgrade infrastructure and open up job possibilities. Pakistan is a country with a wealth of natural resources, including mines and valuable stones. But the industry struggles with difficulties including out-of-date mining methods and a lack of funding for exploration and extraction. With its involvement in this industry, SIFC hopes to entice international capital to modernize mining operations, advance environment-friendly techniques, and maximize the value of natural resources for the benefit of the nation’s economy.
A critical industry that can support a country’s economic development is defence production. Pakistan has a robust defence sector, but it needs to be upgraded and modernized to stay up with modernization efforts. The SIFC’s emphasis on defence production intends to draw international investment, encourage joint ventures and improve the defence industry’s capabilities.
Conclusion
Unquestionably, our country is blessed with abundant natural resources, young and dynamic workforce and a strategic geographic location. Regardless of this, it is unfortunate to note that our FDI at present is 1.5 billion dollars. Realizing the full potential requires a well-defined strategy and supportive investment climate. We are confident that the plan prepared by the Apex Committee of the SIFC will harness these strengths while addressing the challenges that hinder the country’s progress.

The writer is a member of staff.

Muhammad Ali Asghar

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