The Foreign Private Investment Act of 1976, “FPIA” has been passed to promote and protect foreign private investments in Pakistan.  FPIA provides protection to foreign investors with respect to their industrial activities established in Pakistan in or after September 1954. Industrial activities are defined in FPIA as entities involved in the production, distribution or processing of goods.  FPIA exclude the Federal Government from acquiring foreign capital or foreign investments in an industrial activity except under due process of law which provides for adequate compensation to be settled in the currency of the country of origin of the investments.  FPIA support the principle of Equal Treatment where equal treatment will be accorded to local industrial undertakings and those with foreign ownership in the application of laws, rules and regulations relating to import and export of goods.  FPIA, most importantly, subject to some broad limitations, authorizes the Federal Government to open up new areas in the country for foreign investments.

In the wake of Pakistan’s nuclear tests of May 28, 1998, and the anticipated international economic sanctions which were subsequently imposed on Pakistan, the government introduced the Foreign Exchange Act, 1998, to impose temporary restrictions in relation to foreign exchange.  This law sought to override certain provisions of Protection of Economic Reforms Act, 1992, and the terms of any other agreement or contract and suspended the rights of foreign currency account holders to withdraw, transfer or take out of the country foreign exchange without the permission of the central bank.  It, however, allowed the foreign currency account holders to convert their foreign exchange into Pakistani currency at the officially notified rate of exchange which was considerably below the market rate.

The present petroleum policy is designed to promote direct foreign investment in the country by providing more incentives in terms of pricing mechanism and regulatory framework to the companies. This was started by the Minister for Petroleum and Natural Resources.

Due to transparent and investor-friendly policies, major E&P companies are actively pursuing activities in Pakistan and an enabling environment makes it a destination of choice for investors.

Opportunities existed for the foreign companies in the upstream petroleum sector of Pakistan and in offshore areas. Government of Pakistan should do some reforms in policies regarding foreign investments; Govt should take the lesson from China and other countries to make friendly environment with infrastructure and other facilities….

Govt should try to give relaxation in taxes and duties regarding investments and licensing.

References:

www.ppqp.gov.pk