SIFC hopeful of foreign investments once IMF deal is done

ISLAMABAD: The Special Investment Facilitation Council (SIFC), jointly run by the military and civilian sides, believes that the foreign investors were waiting to make multibillion-dollar investments after clinching the IMF deal to secure guarantees for return of their dividends in foreign currency.

On the other hand, the Kingdom of Saudi Arabia (KSA) is keen to procure stakes in the Reko Diq project, but it seems reluctant to invest in the construction of a refinery in the country. Pakistan and the IMF had struck a staff-level agreement and the Fund’s Executive Board was expected to take up approval of $7 billion loan request by end of the ongoing month. The foreign exchange reserves held by the SBP stood at $9.1 billion, which remained at the existing level for the last one year but foreign investors were not much comfortable with existing levels.

Official sources confirmed to The News that Pakistan was waiting to attract $17 billion in foreign investments from three countries, including $10 billion from the UAE, $5 billion from Kingdom of Saudi Arabia and $2 billion from Azerbaijan. “The foreign investors are seeking guarantees for repatriation of their dividends and profits and they are now waiting for approval of the IMF programme under $7 billion Extended Fund Facility (EFF),” one of senior functionaries of the government claimed while talking to The News on Thursday.

Amid increased skepticism that the endeavours of SIFC to bring foreign investment even from friendly Muslim countries have fizzled out, the SIFC high-ups say the figure of $17 billion investment would not pour in just one year, but it would take several years and it would come in only in bankable projects in phased and gradual manner.

The KSA seems interested in Reko Diq and solar panel manufacturing projects in Pakistan. On Reko Diq, Pakistan and Saudi Arabia have agreed in principle to sell out 15 per cent stakes to the Saudi side.

The signing of a Free Trade Agreement (FTA) with the Gulf Cooperation Council (GCC) might play a critical role, as the Bilateral Investment Treaty (BIT) is one of its components under which Islamabad had provided the right of international arbitration. Under the ratification of FTA and part of it in the shape of BIT, Pakistan accepted demands for allowing to approach the Permanent Court of Arbitration (PCA) or International Centre for Settlement of Investment Disputes (ICSID) in case of any disputes on multibillion-dollar investment projects.

Saudi Arabia and Pakistan negotiated the finalisation of the term sheet and valuation. The Manara Minerals Investment Company is a new venture between the Saudi Arabian Mining Company (Ma’aden) and Public Investment Fund (PIF) to invest in mining assets globally and support the development of resilient global supply chains. The Reko Diq Mining Company (RMDC) has been assigned to hire Levies and payment mechanisms defined for Balochistan.

Pakistan has negotiated to include a graduated approach for the settlement of investment disputes between the state and investors. Through this arrangement, there will be a mandatory eight-month period to resolve the dispute at the domestic forums. In the case of non-resolution of disputes, it was agreed that recourse could be made to ICSID as international arbitration forum for securing settlement.