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Old Thursday, April 27, 2006
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Post Investment Policy Of 1997

The Investment Policy-1997 has been formulated to provide an integrated strategy for creating an investor friendly environment with the focus on further opening up of the economy and marketing the potentials of all economics sectors for direct foreign investment. The essence of the policy is to keep Pakistan attractive in International Investment Market by improving the Policy Regime, offering fiscal and tariff relief and through providing additional procedural & Social facilitation.
a) Policies
Previously only manufacturing sector was open to foreign investment. Now, it has been decided to liberalize the Policy Regime, open up other economic sectors for FDI and mobilize the domestic financial resources towards long-term investment. Foreign investment on repatriable basis is now allowed in Agriculture, Service/ Infrastructure and Social Sectors.
I) Services/Infrastructure Sectors
Foreign repartiable investment in above sectors will be subject to the following conditions:-
? Foreign companies which have fulfilled the conditions of registration under the Companies Ordinance 1984 and the requirements of registration with BOI.
The amount of foreign equity investment to be at the level of at least US$ 1 million.
? A minimum 40% of the equity will be held by Pakistani Company/investors in the company / project.

? The import tariff on Plant, Machinery & Equipment (not manufactured locally) will be leviable at standard rate of 10% and no sales tax shall be leviable.
Following activities in these sector will be available for foreign investment:
? Wholesale, Distribution and Retail Trade; Transportation, Storage and Communications/Infrastructure Projects including development of Industrial Zones; Telecommunication (List of deregulated services in Telecommunication Sector is at Annex-III; Real Estate Development (Development of Commercial Buildings, Apartment Buildings, Housing Projects, Super Markets/Shopping Malls, Urban Development, Development of New Communities); Technical Testing Facilities; Audio-visual-Services; Sporting and other recreation Services; Rental / leasing Services relating to Transport Equipment and Machinery, Equipment and Tools for Land Development & Agriculture purpose; Environmental Services.

? Unless title of property is transferred in the name of foreign company, it will not develop real estate projects.

?Inter-Provincial Regulatory Authority will be established at Federal level to regulate and monitor the land and real estatedevelopment by foreign companies.

Condition of induction of Pakistani equity as 40% of the total equity will not be applicable in case of Infrastructure Projects including development of Industrial Zones.
II) Social Sector:
Foreign companies which have fulfilled the conditions of registration under the Companies Ordinance 1984 and the requirements of registration with BOI.

Foreign investment is allowed in Education, Technical/Vocational Training, Human Resources Development (HRD) as well as Hospitals & Medical/Diagnostic Services, on repatriable basis; provided the quantum of foreign equity investment is to the level of at least US$ 1 million.

The import tariff on plant, Machinery & Equipment (not manufactured locally) will be leviable at standard rate of 10% and no sales tax shall be leviable.
III) Agriculture Sector:

• Foreign companies which have fulfilled the conditions of registration under the Companies Ordinance 1984 and the requirements of registration with BOI.

• The amount of foreign equity investment to be at the level of at least US$ 1 million.

• A minimum 40% of the equity will be held by Pakistani Company/individuals in the company/project.

• The import tariff on agriculture machinery (not manufactured locally) will be zero rated. The list of specific machinery and equipment will be notified later.

• In line with the reforms announced in Agriculture Package, there will be no upper ceiling of land for registered agricultural companies which are involved in production, processing and marketing of agricultural products on commercial lines. However, the income of these companies would be taxable.
• Following activities will be available for foreign investment in Agriculture sector:-
• Land Development/Reclamation of barren, desert and hilly land for Agriculture purpose and Crops Farming; Reclamation of Water Front Areas/Creeks, Crops, fruits, vegetables, flowers Farming/Integrated Agriculture (Cultivation and Processing of Crops); Modernization & Development of Irrigation Facilities/Water Management; Plantation/Forestry and Horticulture.

• The proposals related to foreign investment in Agriculture Sector will be processed by the BOI in consultation with the respective Provincial Government and will be approved by the competent Decision Making Forum.

• The land for agriculture purpose can be obtained on lease basis for long periods, i.e. initially upto 30 years, extendible for a further period of 20 years.

• Foreign company, allowed for investment in agriculture sector/reclamation and cultivation of land will not be allowed to transfer such land to any other foreign company unless specifically permitted by the Federal and the concerned Provincial Government.

plz pray,
Sardarzada
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