ISLAMABAD: Pakistan and Saudi Arabia have recently concluded an agreement establishing a bilateral legal framework, a crucial step in facilitating substantial Saudi investments within Pakistan.
According to a government source, an official agreement is anticipated to be formally signed in the near future. This development is being hailed as a significant achievement, with the source noting that a substantial obstacle hindering Saudi investments has now been eliminated.
The Special Investment Facilitation Council (SIFC) played a pivotal role in formulating a comprehensive investment structure tailored for Saudi investments in Pakistan, working closely with Saudi officials. The source revealed that the interim cabinet has already sanctioned alterations in the investment legal framework, aligning them with global standards.
Due to prior instances of investment disputes resulting in unfavorable outcomes for Pakistan in international arbitration tribunals, there had been reservations about incorporating clauses pertaining to international arbitration in new investment agreements. Nonetheless, foreign investors typically seek assurances regarding international security for their investments.
Pakistan’s investment climate has been adversely affected by judicial interventions and actions by the National Accountability Bureau (NAB), leading to international arbitration in the past. Notably, Pakistan was fined $6 billion by the World Bank’s International Centre for Settlement of Investment Disputes following the cancellation of a mining lease for the Reko Diq project involving Australia’s Tethyan Copper Company. As a result, potential foreign investors are hesitant to commit significant investments without concrete safeguards and the option for international arbitration. Similar concerns were raised by Saudi Arabia.
Pakistan anticipates an influx of approximately $25 billion in investments from Saudi Arabia, while also eyeing substantial investments from the UAE, Kuwait, and Qatar. The SIFC is actively engaged in fostering an investment-friendly atmosphere in Pakistan to attract these investments.
Established with support from the Pakistan Army during the PDM government, the SIFC’s primary objective is to streamline foreign investments by addressing hurdles and bureaucratic complexities. Much like its role in matters concerning FATF, the military’s involvement in the SIFC primarily revolves around coordinating and facilitating various federal and provincial entities to alleviate barriers hindering foreign investments.
The SIFC Secretariat, housed within the PM’s Office, was instituted due to inadequate inter-ministerial and inter-provincial coordination. Investors seek efficient responses and swift approvals, which have been lacking, deterring foreign investment.
The SIFC aims to function as a singular platform for investors. Notably, an Arab country’s leader had expressed concerns to Pakistani authorities about the deterrent effect of NAB and judicial actions on potential investments in Pakistan.
(Islamabad51_Newsdesk)
