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Economy

Pakistan believes it can jump from 147th to 50s in ease-of-business

Investment board chief beckons companies to special economic zones

A soldier guards a containership at the port of Gwadar in Pakistan.   © Reuters

TOKYO -- Intensive army operations have improved Pakistan's security so much that, in some law and order surveys, Karachi ranks higher than Chicago. Now, the South Asian country has a new priority: to place in the top 50 of the World Bank's ease of doing business survey and cement its status as an emerging economy. 

Naeem Y. Zamindar, the minister of state and chairman of Pakistan's Board of Investment, told Nikkei in an interview that the government wants to achieve that goal by the end of 2020.

It faces quite a climb, having ranked 147th out of 190 countries in the 2018 edition. But to create a more business-friendly environment and attract foreign investment, Pakistan is pushing special economic zones with a range of incentives.

The government has established or is in the process of setting up seven SEZs in Karachi, Sialkot, Risalpur and elsewhere, granting companies simpler registration procedures and easier land acquisition. 

"Most of the land is already sold," said Zamindar, who assumed his post last November. "It took 20 days to start a business in Pakistan, but now [it takes] only four hours."

The chairman added that another "nine new SEZs will be set up along with China-Pakistan Economic Corridor, or CPEC." He also said negotiations with companies in China, Malaysia and Italy are underway.

The cost of business, he said, "will go down so much, with cheaper power and gas" and easy access to resources. Minerals are readily available in Balochistan Province, for example. Likewise, agriculture products and gems are plentiful in Gilgit-Baltistan.

There will be more to the SEZs than factories. "Thirty percent of the area will be allocated to hotels, restaurants, convention centers and vocational training centers, et cetera."

Naeem Y. Zamindar, the minister of state and chairman of Pakistan's Board of Investment

One challenge was to ensure collaboration between the federal and provincial governments, since the ruling parties are not always the same at both levels. "We set up the steering committee with the prime minister and chief ministers, which reviews all progress and bottlenecks," Zamindar said.

So far, foreign direct investment has been heavily concentrated in the power and construction sectors, which accounted for 52% of the $2.41 billion in net FDI logged for the fiscal year through June 2017. "Of course we want more investment in manufacturing," he said. "And also we'd like to invite IT, telecom, technology companies like SoftBank [Group] and [NTT] Docomo. Cellphones, especially smartphones are now available for 30% of the population. In the next two years, 80% will have access to broadband."

These new phenomena present "a great opportunity," said Zamindar, who previously served as an executive at venture capital Acumen Pakistan and Mobilink, one of the country's biggest telecom companies.

Pakistan is aiming for at least $3.7 billion in FDI for the year through June 2018.

"Suzuki [Motor] is considering a $660 million investment. Marubeni and Mitsubishi [Corp.] are also focusing on LNG plants and Nissan [Motor] and Hyundai [Motor] are coming. Alibaba [Group Holding] has just signed for buying a local company to enter Pakistan. We'd like Japanese technologies in robotics, AI and electronics."

With a general election coming up this summer, foreign investors may have concerns about political stability. Former leader Nawaz Sharif, who was ousted by the Supreme Court over his family's hidden offshore assets, is still struggling with legal battles. 

"We have a strong judiciary, bureaucracy, media and military," Zamindar stressed, saying the "balance of power is much better than [under] former governments. We are [committed to] accountability."

On the tax system, which has also drawn criticism from investors, the chairman said reforms will focus on broadening the tax base and improving business friendliness. "Digital technology," he said, "can secure transparency in taxation."

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