Business Regulatory Environment
In the past, investment in Pakistan was the subject of numerous approvals, permits and licenses which have been thoroughly streamlined recently. Administration of investment is now concentrated with the BOI(Board of Investment ) and the SECP(Security Exchange Commission of Pakistan) in a kind of one stop shop system. Requirements such as the registration of foreign investors with the BOI have been removed, no more screening from the Government on foreign investment is required, unless special incentives are involved, and no requirement to obtain provincial Government clearing for project location other than for a few specified sensitive areas of operation.
The recent reduction in the number of days to set up a business in Pakistan is significant and ranks thecountry among the best in this regard in Asia .
Furthermore, the 1976 Foreign Private Investment Promotion and protection Act, as well as the 1992 Economic Reforms Act offer statutory safeguards for the rights of the foreign investor, on the basis ofnon discriminatory treatment. However, enforcement of such rights through the legal system can sometimes be problematic.
Foreign Investors are permitted to hold 100% of the equity of industrial projects without any permissionof the Government. No Government sanction is required for setting up any industry, in terms of field of activity, location, and size, except for the following:
- - Arms and Ammunitions
- - High Explosives
- - Radioactive Substances
- - Security Printing, Currency and Mint
- - Alcoholic beverages or liquors
There is no requirement for obtaining No Objection Certificates (NOC) from the provincial
Governments for locating the project anywhere in the country, except in areas that are notified as negative areas.
The Foreign Private Investment (Promotion & Protection) Act of 1976 (FPIA)
This Act has been enacted to promote and protect foreign private investments in the country. FPIA1 provides protection to foreign investors with respect to their industrial establishments in Pakistan,precludes the Government from acquiring foreign capital or foreign investments in an industrial undertaking except under due process of law with adequate compensation. It upholds the principle of equal treatment to foreign owned industrial undertakings with regard to laws, rules and regulations.
Furthermore, it confirms the availability of permission for repatriation of capital and profits in foreign exchange as well as remittance by foreign employees for maintenance of their dependents abroad.