KARACHI: The visiting US Secretary Commerce, Penny Pritzker, last Tuesday termed security, unfair taxation and bureaucratic procedures as key impediments to investment and doing business in Pakistan for Americans.
The US principal commercial diplomat who as an entrepreneur created five businesses from scratch opened the two-day third US-Pakistan Business Opportunities Conference. She urged the government of Pakistan to improve the business climate by implementing measures to increase transparency, enforce contracts and streamline bureaucracy.
US Secretary Commerce is heading about 200 investors and business, most of them are Pakistani Americans, who are being provided an opportunity to meet with top Pakistani officials and their business mates face to face aimed at facilitating the two sides.
Addressing the two-day moot at a local hotel and later while talking to a group of media persons in the embassy, she gave good marks to Commerce Minister, Engineer Khurram Dastagir Khan, who is also the host of the event and Finance Minister, Ishaq Dar for understanding the concerns of investors and businesses and making efforts to create a conducive environment. She said the Finance Minister seems committed to ‘Predictable Tax Schemes’ during his term of office.
‘I look forward to strengthening commercial relationship between Pakistan and the United States,’ she said. She maintained that ‘beyond security concerns, many companies have reported to us that bureaucratic procedures in Pakistan can be complex, arbitrary and unpredictable. Even with local partners, foreign firms found contracts and applications languish for weeks or months.’
Replying to a question, she said that the US has conveyed its concern on different issues to the Pakistani authorities. She also quoted the World Bank’s ‘Doing Business 2015’ survey, according to which Pakistan is in the bottom 50 percent globally when it comes to the ease of starting a business, dealing with construction permits, regular access to electricity, property registration, access to finance, tax administration and contract enforcement.
Commenting on taxation issues, Penny Pritzker said that she knows that no issue is as frustrating to a US business as inconsistent and unfair taxation, adding that Pakistan should make its tax structure more predictable and reliable. ‘A lax commitment to fair consistent and tax collection is not only a problem for foreign investors; but it also creates a serious fiscal problem for the Pakistani government as well. A 10 percent tax to GDP ratio means there is not enough money to invest in education, healthcare, roads and bridges, power plants and new sources of fuel’ she added.
According to US Secretary Commerce, another area of severe challenge is the energy sector. The World Bank estimates that Pakistan will need new $3-4 billion investment per year in each of the next five years to maintain and improve the current energy infrastructure. An additional 10,000 MWs of generation capacity is needed to meet demand which is projected to double by 2030.
Commerce Secretary said she had a good conversation with Pakistani authorities with respect to issuance of visas to American investors and businesses besides tax issues. She further added that American investors and businesses are complaining about tax regime changes. ‘You cannot invest until you are aware of changes in taxation,’ she continued.
Answering another question, she said that the US is concerned about violation of Intellectual Property Rights, adding that US Trade Mark office and Pakistan Trade Mark are closely working on the issue.
She said trade relations between Pakistan and China will create more business and US wants Pakistan’s business to grow. Trade is a global phenomenon. Pakistan can find a market in goods and services in China, which is good thing for Pakistan. The US wants Pakistan stronger economically and the more secure Pakistan is better for all of us, she added.
In reply to another question, she said that Trade and Investment Framework Agreement (TIFA) is progressing between the two countries. However, she said, it’s hard to pass any new legislation in the US at this stage. Focus should be business to business and access to financing and entrepreneurship.
Commenting on GSP-Plus status for Pakistan, she said that GSP lapsed 20 months ago and it is not Pakistan specific, but is applicable for number of markets. The Obama administration really supports reauthorization of GSP-Plus status, but unfortunately the Congress has not yet acted and that is a challenge. The way is to improve business to business relations, she reiterated, she quoted Pakistani women entrepreneurs, who were not looking for aid, but sought help to introduce them to customers in the US.
Commenting on the delay in signing of Bilateral Investment Treaty (BIT), she said the draft of US BIT is with the Government of Pakistan since 2012 to study and comment that it is doable for Pakistan to meet the criteria of US Model.
Replying to another question, Secretary Commerce said, she talked about trade relations in the region, including India and Pakistan. “Pakistani government seems very much committed to having more trade in the region. We are encouraging it because fundamentally our belief is the more trade goes on, the greater the stability brought to the relationship: she said
