The federal cabinet on Wednesday approved the Investment Policy 2013 envisaging an ambitious foreign direct investment target at $5.5 billion per year, which will be achieved gradually by adjusting economic priorities in the face of the changing global scenario due to an economic slowdown, coupled with domestic problems of power outages and continued pressure on economy because of the war on terror.

The federal cabinet, which met under the chair of Prime Minister Raja Pervaiz Asharf, has approved the draft of the Investment policy 2013, which was finalised by the Board of Investment. According to the draft, the new policy will be instrumental in increasing foreign direct investment (FDI) to $2 billion in 2013, then with a growth of 25pc to $2.5 billion in 2014, $2.7 billion in 2015, $3.25 billion in 2016 and $4 billion in 2017. FDI will be taken to at least $5.5 billion per year.

The policy further stated that assuming an average annual economic growth of 5pc, the FDI would account for 20pc of gross domestic product (GDP) growth, which is close to the current global average.

Special Economic Zones (SEZ) Act 2012, the center piece of Investment Policy 2013 will encourage industrial clusterisation, and bring Pakistan on international economic radar offering liberal investment regime and adequate physical infrastructure. The investment and incentives will stand fully protected to stay through this Law. The SEZs will reduce the cost of doing business, enhance productivity and will help in economic development and poverty reduction.

The Policy has been designed to provide a comprehensive framework for creating a conducive business environment for the attraction of Foreign Direct Investment (FDI). For implementation of the policy, FDI Strategy for Pakistan, 2013-17, outlining a detailed plan for structuring the platforms has been dovetailed with it.

The policy seeks to remove obstacles and impediments in the way of foreign and domestic investments, putting Pakistan’s investment environment in line with those of its international competitors.

According to the policy, all sectors and activities are open for foreign investment unless specifically prohibited or restricted for reasons of national security and public safety. Specified restricted industries include arms and ammunitions; high explosives; radioactive substances; securities, currency, and mint; and consumable alcohol.

The policy draft stated that, there is no minimum requirement for the amount of foreign equity investment in any sector and there is no upper limit on the share of foreign equity allowed, except in specific sectors including airline, banking, agriculture and media.

Foreign investors in any sector shall at any time repatriate profits, dividends, or any other funds in the currency of the country from which the investment was originated, as per clause 6 of the Foreign Private Investment (Promotion & Protection) Act 1976, and subject to procedural requirements set under the Foreign Exchange Manual 2002 of the State Bank of Pakistan.

According to the policy, permission for opening of branches of foreign banks will continue to be granted by the State Bank of Pakistan. Foreign investors shall be entitled to sell shares, transfer ownership, and de-register under Companies Ordinance 1984 and Banking Companies Ordinance 1962.

The BoI will work with the SBP, SECP and Ministry of Finance to open up and promote foreign investment in the insurance, banking and financial sectors. Foreign investors shall have the right to exchange the local currency into any other freely convertible foreign currency, subject to Foreign Exchange Regulations of SBP.

There shall be no restrictions on the use of foreign private loans within three major loan categories as defined in SBP Foreign Exchange Manual 2001 or the debt-to-equity ratios used to finance the foreign investment projects. The use of the funds if received from foreign loans shall be extended to any purpose, not limited to imported plant and machinery. Foreign investors in all sectors shall be allowed to access domestic borrowing subject to prevailing rules/ regulations of SECP and SBP and observance to Debt-Equity ratio.

Foreign investors shall be entitled to lease land without limitation under the rules & regulations of the concerned authority. There will be no limitation on the transfer of any land held by a foreign investor unless contractually specified in an agreement between the landholder and subject to the Federal or provincial regulations. Restrictions on foreign real estate developers have been removed and now they will be subject to the same rules and treatment as domestic real estate developers.

Foreign investors will also be permitted to hold a 60pc stake in agriculture projects. In corporate farming, the investors will be able to hold 100pc equity.An industrial unit introducing new technology in the country, which was not available before, will be declared an industry pioneer and will receive incentives similar to those enjoyed by units in special economic zones.

The Investment Policy seeks to uniformly improve the conditions for investment across all sectors. It is necessary and prudent to promote or restrict activities in specific industries. To this extent, BoI is working closely with the relevant line ministries in sectors like textile, energy, agriculture-livestock-dairies-fisheries.

Pakistan has significant potential in tapping alternative energy sources including geothermal, wind, solar, biomass, and bio fuels. The Alternative Energy Development Board Act, 2011 to develop policies, facilitates projects, and provides technical expertise in increasing the generation of alternative energy.

Easy access to counselor services plays an important role in investment attraction. Pakistan has adopted a comprehensive and investor friendly visa policy.

Pakistan Missions abroad are authorised to grant five years validity (multiple entry) visa within 24 hours to businessmen of 69 countries of Business Visa List (BVL), with the duration of each stay restricted to three months on production of required documentation. Allowed documentation will be expanded to include invitation from Pakistani companies, BoI, or Provincial IPAs.