Pakistan on Tuesday said that the Special Investment Facilitation Council’s (SIFC) hopes for an investment of $70 billion were backed by foreign assurances but acknowledged that these deals would take some time due to geopolitical and commercial reasons.
Jahanzeb Khan, Secretary of the SIFC apex committee, also disclosed that financial advisers had finalised the valuation of Reko Diq copper and gold mines and discussions with Saudi Arabia over the modalities of its investment in the project would take place soon.
“The $70 billion is not an abstract figure, as it has been backed by assurances from other countries,” said Khan, who is also the deputy chairman of the Planning Commission.
It was the first briefing to media persons on the working of the SIFC, chaired by the prime minister along with the chief of army staff.
Khan said that the country had promised to make an investment of $25 billion through its sovereign fund but it would take time before the investment could materialise.
The $70 billion investment would mostly come from private investors and the foreign governments-led investment would be through sovereign wealth funds, he elaborated.
The investment would start trickling in once there was an overall improvement in the situation and foreign investors completed their review of certain policies, including the green field investment policy, said Khan.
“This is an extraordinary situation, as economic challenges are of very serious nature,” said the secretary.
Former PM Shehbaz Sharif had set up the council in June this year on the advice of the army chief, which raised concerns about the role of the military in economic affairs.
To a question, the secretary said that there were concerns that Gaza war would have an impact on the investment commitments of the Gulf countries but “we have not yet analysed the exact impact”. Now, the investment would take more time to materialise due to the war, he added.
Pakistan has hoped for receiving $6 billion to $7 billion in Saudi investment in the Reko Diq project but so far no tangible progress has been made.
Reko Diq investment
Khan said that financial advisers had almost finalised the valuation of gold and copper mines. “Our desire was that Saudi Arabia should invest in an adjacent block of the Reko Diq mines but the kingdom wants to invest only in the existing block where Barrick Gold and Pakistan are equal partners.”
He said that the evaluation of the existing block had almost been done and after that modalities of Saudi investment would be finalised.
“We have valued our shares and have a thinking that Barrick Gold should also dilute its shares, as it is in everybody’s interest that Saudi Arabia should invest in Reko Diq mines,” said Khan while responding to a question about Barrick Gold’s concerns.
A third party had been engaged for the evaluation of Reko Diq mines and hopefully the exercise would be completed much before the deadline of December 25, said Khan.
“We want to make this deal clean so that it can be used as a benchmark but we will not sell our shares at throwaway prices,” he said, adding that the country’s national interests would be protected. Khan also faced questions about the military’s role in economic decision making.
“We want to take advantage of the military’s capacity in the areas of agriculture and information technology where they have worked well. The investors working in the mineral sector need security, which only the military can provide,” he said while justifying the presence of the military in the SIFC.
The military has developed national capacities in developing agricultural farms and IT networks, he added.
Read: Investment in Reko Diq sought
Right now, according to Khan, Saudi Arabia is reviewing the green field investment policy and once the Saudis clear it, it will be easy to bring investment in the oil refinery. He said that investment in solar power plants was linked with the solar tariffs to be determined by Nepra.
design: Ibrahim Yahya
Poor SIFC performance
In its first five months, the SIFC has not brought even a dollar worth of new investment.
“Whatever SIFC has so far achieved, it could not be done in the past many years,” Khan stressed while citing 12 decisions the SIFC had so far taken and implemented.
The SIFC has facilitated approval of the uniform right of way charges policy, national framework for telecom infrastructure sharing, advisory committee for the auction of telecom licences, land information management system, a solar captive power plants project, 1,000 acres of land for cultivation in South Waziristan and a visa policy.
The SIFC has also facilitated the enhancement of export proceeds limit to 50% for the IT sector, issuance of foreign currency-denominated debit cards for overseas payments, freelance digital accounts, 202MW Rashakai power project and 1MW solar power project in Gilgit-Baltistan.
But the decisions that the SIFC has so far taken should have been taken by the Economic Coordination Committee (ECC) or the ministries concerned. The secretary also faced questions over apprehensions of the SIFC becoming dormant once an elected government was in place.
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“I am sure the military will advise the next government to use the SIFC platform for bringing foreign investment,” said Khan. “SIFC law will stay but how the incoming government wants to use that it will be up to them.”
A day earlier, Khan also briefed the IMF about the role and functions of the SIFC and tried to address its concerns.
“The IMF wants that there should be an element of transparency and accountability in the SIFC working,” said the secretary. The IMF’s concerns were not about the existence of the SIFC but about any preferential treatment that the body could give to investors, he added.
The IMF also asked questions about distorted sales and duplication of work by various government departments, he said. It asked about the need for setting up the SIFC when there were other departments performing the same functions.
Jahanzeb said that the IMF appeared satisfied with the explanation. “SIFC is not an institution but an intervention body to make other institutions work,” he added.
Published in The Express Tribune, November 15th, 2023.
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