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Foreign Direct Investment In Telecommunication In Pakistan

Facts on policy reforms provided evidences that government of Pakistan is taking serious steps for the growth of Foreign Direct Investment in the country. It also witnessed that investors are given proper incentives and protection. They are considered back bone of growing economy of the country. Steps for the liberalization, privatization and deregulation of the telecom sector were specially appreciated by investors and considered as rational thinking of the current government. The liberal FDI policy by the Government of Pakistan and deregulation and privatization of the sector has triggered a wave of international acquisitions in the sector. During the last year about US $ 2 billion worth of acquisitions were made in the telecom sector. After liberation of the sector a large number of firms are found working in Pakistan’s telecom sector.

 

Information on the environmental factors also observed same kind of trends which are targeted toward increase in FDI in the country. Moreover, our government is very much keen to provide investment friendly environment for the investors. Solid steps of PTA as regulatory body of telecom sector and support from the government enhanced the level of confidence of foreign investors and stimulate the investment environment of the country. Due to satisfaction of the investor Pakistan enable to have 19th position out of 175 countries in securing investors. PTA has proved a conducive and investor friendly environment in the telecom sector by awarding licenses in a fair and transparent manner. All operators mostly foreign are rolling out their networks rapidly all over the country, which requires huge investments. The foreign investment has created an environment of competition in the mobile sector and the tariffs have reduced substantially with improved telecom services.

 

Since international investors learnt it worthwhile opportunity to invest in Pakistan and especially in the telecom sector, telecom companies have invested over US $ 8 billion during the last four years in Pakistan. In 2006-07 Cellular Mobile sector has invested over US $ 2.7 billion. This sector of economy is in its boom in these days and it is generating chunk of profits for the investors and revenues for the government in the form of taxes.                                                                                                                                                                                                                                                

Pakistan Mobile industry is witnessing increasing net addition to total subscriber base for last five years. In 2006 the net addition was more than 21 million in one year showing 1.75 million average addition per month whereas in 2007 the net addition was more than 27 million increasing average addition to 2.3 million per month.

 Pakistan kept on relaxing investment-related policies for its telecom industry, FDI in the sector boosted up. The difference between nature of policies in early 90s and in 2000 onwards is reflected in the difference in the level of foreign direct investment in telecom, especially cellular phone, sector of Pakistan. 

Recommendations:

 

Revolutionary reforms and even new tax structure should be introduced in order to save investors from the complexity of tax structure as well as to save time. Tax reforms are very important for attraction and retention of potential investors.

 

All measures should also be taken by keeping in view the sovereignty of the country. Encouragement of FDI shouldn’t be practiced at the cost of supremacy of the home country.

 

Absence of long-term government policies prevents the implementation of long-term plans. Gaining the confidence of foreign investors asks for consistent and coherent policies. The situation over the last five years has certainly improved but a lot more needs to be done.

 

The laws and regulations should be simplified, updated, modernized, made more transparent, and their discretionary application must be discouraged.

 

The availability of better quality and more reliable services in all areas of infrastructure are key ingredients of a business environment conducive to foreign investment. In most infrastructure services, Pakistan is highly deficient as compared with many developing countries that have attracted higher levels of foreign investment. Pakistan will have to investment more in the areas of education and physical infrastructure.

 

Government should focus on its positive image display all over the world.

 

Government should make such a statistical data of its citizen which are abroad and provide them incentives plus security and encourage them to invest in their homeland. 

 

Government should make policies regarding sending its delegation to potential investor nations and make them aware of opportunities available in Pakistan but before this government should ensure faire grounds and security measures.

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