International Legal Protection of foreign Investment in Pakistan

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Abstract

In this research we will try to explore the notion of foreign investments in a holistic context. The main focus of the research will be on the legal protections pertaining to foreign investments in Pakistan. The research will also analyze many aspects of foreign investments and will try to gauge its effect on the economy of Pakistan.

Finally the research will describe various factors which are responsible for the hesitation of foreign investors to invest in Pakistan and will try to describe the overall effect of the strength and application of international legal protection policies for foreign investments in Pakistan.

Chapter 1: Introduction

Background of the study

There are many incentives that are offered to foreign investors if they choose to invest in Pakistan. This is because Pakistan has the most liberal policies pertaining to foreign investments as compared to the entire South Asian region. There are various measures and fresh incentives which have been introduce for further liberalization of foreign investment policies.

Some of these measures include a reduction on minimal foreign equity from US$ 0.5 million to US$ 0.3 million; projects of infrastructure, international food franchise, social service, and agriculture are allowed a fee on technology, remittance of royalty and technology; equipment and machinery, capital goods, plant, which are not locally manufactured have zero import duties on them; CBR can provide a listing of topically invented goods. In event of question the investor is experienced to confer with the BOI; Heightened FYA from 50% to 75% of PME for agriculture and substructure designs. The import duty on farming system not constructed in the vicinity for recorded corporate agricultural designs are zero.

Moreover, Zero tariffs on raw materials used in the production of exports. The investors who invest in the newly opened sectors can import plant, machinery & equipment (not manufactured locally) at concessional rate of customs duty which is 10% and also avail first year allowance at a rate of 50% of the cost of plant, machinery & equipment.

Rationale

In terms of foreign resource enlistment, crisis foregrounds the pressing demand to revise the optimal mix of foreign capital, i.e., the right of government concessional loans, commercial loans, assortment investment and FDI.

A volatile movement in active portfolio investments from the Asian crisis, which was backed by a panic withdrawal of short-term commercial loans, has triggered the situation. However, do not have any connection with foreign direct investment (FDI) because of its high stability. More than 3/ 4th of the responders (out of 110 firms) are enthusiastic to invest in next two years in Pakistan. Nevertheless, investor interests pertain to certain factors like the situation of law and order in the country, energy deficiency, political dubiousness, high cost of operations and infrastructure blockage.

This underlines the grandness of FDI in the developing member countries (DMC), letting in groups DMC, at least developed countries, where domesticated financial markets are delicate and confined liquidity.

Pakistan belongs to this group. The size of its fiscal market is very small and its currency and liabilities ...