In the medium term, addressing Pakistan’s balance of payment problem requires a policy framework centered on facilitating private sector investment, both domestic and international. A stable political and economic environment is essential for long-term success. Both have been missing in Pakistan; and as a result of which, the country has been missing from the global value chains.

In the last three decades, no major green field manufacturing projects have been launched in Pakistan apart from power sector projects in IPP mode and urea/fertilizer plants. There are direct sovereign guarantees being offered in IPPs and the equity returns are ensured, while in case of fertilizer the raw material is being supplied at cheaper rates, offering protection against imports.

Very few examples exist of competitive investment in the services sector – banking and telecom in early 2000s. However, almost all foreign players who entered the domain have exited at a loss in dollar terms while profitable firms are struggling to repatriate dividends.

This implies that the overall........

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