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Investment Policies

Currently, investment policy is created to attract the investors. The aim is to extend the economy of the country and open the doors for direct foreign investment. Some attractive incentives are available for investors like capital gains, profits and full repatriation of capital. According to experts, the investment policy of Pakistan is very liberal, if compared with the other countries in the South East Asian region.

Pakistan’s investment policy has been formulated to create an investor-friendly environment with a focus on further opening up the economy and marketing the potential for foreign direct investment. Various incentives have been offered to attract foreign investment including full repatriation of capital, capital gains, dividends and profits. Furthermore according to various economic commentators, Pakistan has the most liberal investment policy regimes and public-private partnerships in the entire South East Asian region.

Features of Investment Policy

Some important features of the investment policy of Pakistan are as follows:

  • Local and foreign investors are treated on equal bases.

  • All financial sectors are open for FDI, but there are few expectations. For instance, explosives, security, arms and ammunition, radioactive substances, mint and currency printing.

  • For infrastructure, services, social sector and manufacturing, 100% foreign equity is allowed.

  • For non-manufacturing sectors required minimum foreign equity is $0.3 million. For service sector minimum limit is 0.5 million and no minimum limit is required for the manufacturing sector.

  • Royalty remittance, franchise and technical fee, profits and capital is permitted

  • Government provides tariff and tax packages to the investors.

  • On the manufacturing equipment, machines, infrastructure, import of plant and social sectors 5% custom duty is imposed.

  • For services sector, including telecom and IT, custom duty is 0-5%.

  • In agriculture sector, customs duty is 0%.

  • If an investor imports machines, he has to pay no sales tax.

  • Initial depreciation allowance is given as a form of tax relief. The allowance is 50% of machine cost for all the sectors.

  • Laws for the protection of investors

  • For the protection of foreign investment for laws are formulated

  • Protection of Economic Reforms Act, 1992.

  • Foreign private investment act, 1976.

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