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‘Security, energy shortfall, change in govt policy badly affect FDI’

ISLAMABAD: The fundamental apprehension for foreigners, especially for Japanese investors in Pakistan are the security concerns, energy constraints and non-availability of proper infrastructure facilities, said Japan Embassy Economic and Development Counsellor Naoaki Kamoshida during discussion with journalists. Foreign Direct Investment (FDI) is being hampered due to these concerns.   
Though, overall situation in Pakistan was not as bad as local media in Japan portrayed it but it required some proper attention on part of government of Pakistan. 
He said the government of Pakistan always promised to provide all these facilities but some times it failed to honour its commitments in provision of these facilities to foreign investors. Once, the commitments made with foreign investors then efforts should be made to honour its promises.
Counsellor said we the Japanese investors were confronting several challenges, particularly frequent change in government policy. Japanese investors usually interested in auto sector and the government policy in this regard was always fluctuating, some times allowed three years used cars while some time five years. Such a change in policy badly affected our auto related investors in Pakistan. The Japanese investors were always worried about government policy on import of used cars.
About Pakistan economic situation, Kamoshida said the macro economic situation was not good for the last several years. However, with the formation of PML-N government, the economic indicators were showing a positive change and going in right directions. He expressed the hope it would further improve with the passage of time. Now with these positive indicators, he said International Monetary Fund programme was there and the World Bank and other donors including Japan were also assisting Pakistan in its efforts to put economy on right path.
About expected future investment in Pakistan from Japan, he said there were several requests for different sectors by Pakistan and the Embassy and government of Japan were looking/considering these requests. 
However, energy, promotion of investment in Pakistan, polio eradication, technical education, water and sanitation and some other sectors are priority for Japan. We are looking project to project base and do not has set ceiling for any particular sector, he maintained.
The staff of Japan Embassy worked hard to promote bilateral trade activities between Japan and Pakistan. The business environment in Pakistan is very good and attractive and we worked hard to draw attention of Japanese investors towards Pakistan.
Pakistan has 6th largest population of the countries of world but in recent years, the country has suffered severe power shortages with outages lasting up to 12 hours a day even in urban areas. Without enough power available for companies to operate factories and carrying out commercial activities, economic development is hampered, leading to a reduction in private and foreign direct investment. 
The negative impact inadequate power has on the national income (gross domestic product) in the country is believed to be about 2 percent. This is because of low electricity tariffs backed by government subsidies, payment collection difficulties and transmission and distribution losses. Due to these factors, the costs needed to generate and supply power cannot be recovered. On the top of this, he said subsidies to keep the electricity rates low was exacerbating the severe financial situation in Pakistan, so reforming the energy sector was priority for Pakistan both from the perspective of economics and fiscal policy.
To solve structural issues in the energy sector, Nawaz Shairf administration issued its ‘National Power Policy 2013’ in July that included specific numerical targets for improving the gap between the power supply and demand, reducing the cost of power generation, reducing transmission and distribution losses and improving the tariff collection rate. 
Proactive efforts by the government are now underway to reform the energy sector, including a tariff increase that went into effect in August 2013.
He said Japan has provided various assistance to the energy sector in Pakistan, which has improve infrastructure by constructing power plants, transmission lines and others.
Building on those experiences, technical support for formulating least cost generation development plans and other activities utilising Japanese knowledge is planned, related to this programme. 
Because the energy sector is expected to need further assistance going forward, Japan International Cooperation Agency will continue to provide support to Pakistan at appropriate times in cooperation with the international community while monitoring the progress of the reforms by the government of Pakistan.

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