Interview with Saleem H. Mandviwalla, Minister of State / Chairman, Board of Investment
Please tell us about your professional background?
I belong to a business family who migrated from Indian Gujrat and settled in Karachi in 1920. The conventional business of our family is Real Estate; afterwards we went into different businesses like Automobile and Movies.
I was always active in the chamber activities and in various interactions with the government. I previously had relationships with the Peoples Party government and personally knew former Prime Minister Benazir Bhutto. This new government wanted someone from the private sector in the Board of Investment (BOI). They asked me to breathe some life in this sector. I took the task and started in 2008 and now BOI is reachable to investors and people.
What is the role of Board of Investment?
All the developing countries have organizations like BOI with different names. The main objective of this organization is to bring investment related matters in the board in which decisions are not being made in a conventional manner. The board resolves those matters and is in coordination with the prime minister’s office. We address issues which are not related to investment. An investor can have multiple issues which include law and order problems, infrastructure problems, electricity and other utilities issues. We address multiple issues in different areas to facilitate the investors.
What is the present situation of the business and investment in Pakistan and worldwide?
Currently, like other countries investment is on a decline inPakistan. Governments are positively intervening in businesses because of the overall slump in the world economy. The whole capitalist structure has failed worldwide. It is proved that free market structure has been unsuccessful and there is a need of a new structure. In Pakistan, we are living in a much more controlled environment as compared to western countries which is why we face problems at a lower scale otherwise our economy would also be destroyed like Dubai.Dubaisurvived only because the federal government isAbu Dhabiwhich is conservative in running the economy. Otherwise the whole U.A.E would have been declared bankrupt. U.S. China and other governments have injected huge amounts of cash in the local economies by giving credit so that consumers are able to continue the sale and purchase of different products which will ultimately benefit the whole economy. On the other hand economies likePakistando not have that fiscal space (cash) to inject in the financial system.
InPakistan, we should not follow the procedures practiced in western countries. We should make a structure which is according to our environment. The foreign investment is very less these days inPakistanbut we are still better off than other countries.
How do you facilitate the local and foreign investors in the present environment?
Our policies are very liberal without having any defect in them but the issue is implementation. We register companies on a fast track basis. In registration process, we are better than Chinaand Indiaand rank 85th out of around 180 countries in conducting business. Indian government policies for businessmen are very difficult and it takes time for an investor to enter the Indian market. To target investor’s various problems we have created local board of investments in Punjab, Sindh, Khyber Pakhtunkhwa (KP) andBaluchistan. We have a frame work of investment policy but on the ground level this investment actually goes to a province which is why we refer different investors to the provinces where our provincial BOI offices can facilitate them and act as a bridge between the government and the investor by providing all the necessary government permissions and certifications to start work.
Is there any specific investment amount criteria used by BOI for investors?
There are no limitations. There are investors with more than Rs. 100 crores who are taking our help and there are also some business men who have an investment of Rs. 1 crore.
Why is there a decline in the foreign investment in Pakistan in the last 2 years?
The decline is due to global economic crises. The countries that used to invest inPakistanhave gone to zero. There will be a shift and in the next 10 years but the largest investors will not beUnited States,Europeor U.A.E., it is going to be Asian countries. This shift is going to be world wide. Today the biggest foreign investor isChina.
How are your policies feasible for investors?
The policies are investor friendly and accommodating. If you come to BOI as nobody and say that I want to register a company and you have proper (required) documentation, we can help you in establishing a business in 48 hours. The only problem occurs when the investor does not have proper documentation.
After setting up a business, what role does BOI play?
After starting a business, the investor can have multiple issues. Sometimes the investor cannot find a location for his new branch office or cannot get the electricity connection easily etc. We resolve these kinds of day to day issues of investors.
What investment opportunities do you see in Pakistan?
The largest opportunity lies in the agriculture sector. I think it is still unexplored or it has not been really looked at by the real investors who are in the agriculture business. It is a vast area with a number of fields and businesses which can attract massive investment. For example, Pakistan is the 4th largest producer of milk and 80% of milk is not sold in packed form. Which means 80% of this sector requires investment. Similarly we need huge investment in storage and warehousing. We still store our raw materials in open storage spaces. These days it is all stored in cylos around the world in which a certain temperature and moister for each product is maintained. Similarly, we need investments in exploration, mining and energy. We do not have much knowledge about alternate energy inPakistan which again is a great investment opportunity.
Why is there less investment in energy or alternate energy sector of Pakistan even though it has huge potential for investors?
Since 2002, we have a policy that 5% of the energy ofPakistanshould come from alternate energy, now it is 2010 and still we have very low alternate energy sources. International investors want to invest in this field, but they get frustrated due to the bureaucracy of the government offices and then they leave without investing. Bureaucracy is one of the biggest problems ofPakistanas it does not allow international investors to enterPakistan. Bureaucrats should provide feasible opportunities to the investors who come from other countries. We need foreign investors and if we do not facilitate them they will go to another country and invest their money.
Our media should also play a role in this aspect. Currently, media is playing a negative role towards the economy by projecting all the negative news. There are some great things happenings inPakistanbut media does not highlight them and is always busy in highlighting the bomb blasts and other crimes. Media should act as a responsible pillar and play a noteworthy role in projectingPakistanpositively.
What are your future plans?
We are trying to restructure the BOI by allowing private sector to be a part of BOI. BOI cannot be run as a conventional bureaucratic government organization anymore. We are also trying to create special economic zones inPakistanand incentive would be given to industrial investors who will enter this zone. We will create industrial zones inPakistanat different locations so that the cost of business may reduce.
What recommendations would you like to give to the government?
Government should make a feasible environment for implementation and should not interfere in businesses. We are trying to remove different government permissions (NOCs) from different businesses. For example, in the telecommunication sector, we have been successful in de-regulating it and today we can see the miraculous change in the telecom sector ofPakistan. The cell phone call which used to cost Rs. 10, today is for Rs. 0.5 only. There is a revolution in this area and you can see the huge investments and business opportunities in the telecom sector ofPakistanwhich occurred in the last few years. Even developed countries are amazed at our communication sector. I know some Germans who have purchased post paid connections fromPakistanto use inGermanybecause the local charges are higher as compared toPakistan’s cell phone roaming costs.
My advice to the government is to de-regulate the power sector ofPakistan. Let everyone generate their own power and sell it to anyone they like. The flood water was a huge resource which has been wasted. It could have provided us the power for the next 5 years. The power sector needs to be de-regulated to bring a revolution in this sector.