It is very strange, rather pitiable, that foreign diplomats should tell us to do what we should be doing on our own. According to a news item in Business Recorder on 29th June, 2012, British High Commissioner to Pakistan, Adam Thomson, has advised the government to think about "misconception risk" attached to some of the decisions involving international companies taken by the Supreme Court of Pakistan, which is not encouraging for foreign investment. Talking to a select group of media persons, he quotes the latest verdict related to Reko Diq case and remarks that "a strong commercial law in a country is very important for British companies, which are engaged in projects abroad. No doubt, a strong judicial system is not only upholding the Pakistan's interests but extremely important to foreign companies too." Explaining further, Thomson says that international companies often engaged in international arbitration if not satisfied with local decisions, which is not a good omen for Pakistan. "Verdict in international arbitration may have chilling effects on investment," he opines. The top British diplomat in Pakistan has also certain other grievances. According to him, corruption is a big problem in the country though business environment is comparatively better compared to other South Asian countries. The UK government has introduced very stringent anti-bribery act which governs British companies. Changes in reorganisation of ministries, and regulatory bodies following the introduction of 18th Constitutional Amendment have also created confusion for the UK companies doing business in Pakistan. Another problem is security perception which is hard to dispel though the Bilateral Investment Treaty (BIT) signed in 1994 has been providing protection to companies in both countries. Although, the British High Commissioner has not listed all the obstacles to the free flow of foreign investment into Pakistan, yet we feel that his briefing to the media is a fair and objective comment on prevailing situation with regard to FDI flows which have declined from a reasonable level of about $5 billion a few years ago to less than dollar one billion per annum at present. Though a lot of factors including political uncertainty, acute energy shortages and very poor law and order situation, have been responsible for such a steep fall in FDI, yet the British High Commissioner seems to have highlighted only those constraints which are of primary concern to the UK companies. His observations on Reko Diq case are particularly important because the problem has come to the fore only recently and could have huge repercussions for foreign investment prospects in the country. Obviously, foreign companies would seek redressal of their grievances through international arbitration only if they are not satisfied with the decisions of the local courts, which speaks a lot about our judicial system. It is sad that the government and the courts are found to be oblivious of severe economic ramifications of such a negative development. A lot of ground has to be covered to ensure the neutrality and effectiveness of our legal system in order to gain the confidence of foreign investors so that they can be certain of impartial decisions if there is a dispute. It is also very important for the corrupt elements in Pakistan to realise that it is now very difficult for foreign companies to indulge in corruption and dish out other favours due to stringent laws in their countries. The confusion about reorganisation of ministries, regulatory bodies etc following the passage of the 18th Constitutional Amendment is also a very valid point. In fact, such confusion might also be negatively impacting the investment decisions of Pakistani businessmen. We should be thankful to High Commissioner Thomson for his frank views on foreign investment and should try our best to remove these constraints at the earliest. Of course, a very close co-operation between the government and legal fraternity and removal of confusion by the concerned departments about the areas of their operations after the 18th Amendment are essential requirements to remove growing misperceptions about the government's inability or non-serious attitude arguably about these mundane matters. Adam Thomson may have overstepped his diminutive jurisdiction a bit but we feel that his advice warrants serious consideration because the issues highlighted by him are too important to be ignored for the economy of Pakistan. The focus of government's efforts in all cases should be to redress the genuine grievances of investors as soon as possible to facilitate higher level of investment.
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