According to newspaper reports, Pakistan is likely to receive foreign portfolio investment of $500 million if the MSCI, which is All-Country World Index, reclassifies it as an emerging market in its upcoming annual review in May. Experts believe that Pakistan would attract a significantsize of foreign investment after MSCI upgrades its status from frontier market to emerging market. Foreign investors are always ready to invest anytime anywhere in the world, provided they are offered attractive benefits and security of their capital and their lives. Pakistan is weighing options to offload its loss-making enterprises which are causing billions of rupees losses to the national exchequer, but it needs structural reforms and national consensus to offer privatisation of loss-making enterprises to the foreign investors. If the government wants to work as a facilitator of business activities and not as a business enterprise, it will have to introduce economic and financial policies to attract foreign direct investment.
The foreign donor agencies are also pressing the government to rid the country of loss-making organizations, including Pakistan International Airline and Pakistan Steel Mills. However, according to an IMF official, the government is reluctant to privatize the power distribution companies whereas the country is incurring millions of rupees line losses every year. The government is preparing to negotiate the 10th review of the economy for the period October-December 2015 with the IMF. In the words of Finance Minister Ishaq Dar, the country has met five conditions of the $6.2 billion loan programme. The medium-term outlook of the Pakistani economy is positive as the difficult portion of reforms has already been implemented. However, a political consensus is also important to give legal cover to the government measures. It is important to note that many foreign investors have shown interest in the purchase of the state owned enterprises, including the PIA. The fund has set June as the deadline for the privatization of the national carrier.
Whether the privatization of the state owned enterprises brings windfall or not, the government must ensure transparency and norms of justice in the sell-off process. The government should also encourage the local investors to buy the state owned entities rather than offering the national assets to foreign investors. The government agencies should also prefer the national interest over everything and avoid witch-hunting of the business community. The IMF, the World Bank or any other donor agency should have no right to dictate its conditions or impose its decision on this country. But the government should also place minimum reliance on the world donor agencies.
