Foreign Direct Investment (FDI):

Foreign direct investment refers to direct investment equity flows in the reporting economy. It is
the sum of equity capital, reinvestment of earnings, and other capital. Direct investment is a
category of cross-border investment associated with a resident in one economy having control or
a significant degree of influence on the management of an enterprise that is resident in another
economy. Ownership of 10 percent or more of the ordinary shares of voting stock is the criterion
for determining the existence of a direct investment relationship. Data are in current U.S.
dollars.There are three major factors
1. Economy
2. Political situation (democratic or autocratic)
3. Legal (Laws)

Economy :
“An economy encompasses all of the activities related to the production, consumption, and trade
of goods and services in an entity, whether the entity is a nation or a small town. No two
economies are identical.”
Economy of Pakistan :
The economy has likely weakened in FY 2023 (July 2022–June 2023) to date. Exports fell 12%
and remittances 13% in July–April, and the Purchasing Managers’ Index has been bogged down
in contractionary territory. Floods between June and October caused an estimated USD 40 billion
in damage and, by destroying crops, have inflamed inflation and pushed up spending on imports.
In turn, this has drained international reserves, forcing the government to seek a deal with the
IMF. This moved a step closer in early May, when the IMF said that Pakistan had agreed to scrap
a proposed fuel subsidy.
Regulated Economics :
“A regulated market is a market over which government bodies or, less commonly, industry or
labor groups, exert a level of oversight and control. Market regulation is often controlled by the
government and involves determining who can enter the market and the prices they may charge.”
Socialism:
“Socialism is, broadly speaking, a political and economic system in which property and the
means of production are owned in common, typically controlled by the state or government.
Socialism is based on the idea that common or public ownership of resources and means of
production leads to a more equal society”.
Communism:
communism, political and economic doctrine that aims to replace private property and a profit-
based economy with public ownership and communal control of at least the major means of
production (e.g., mines, mills, and factories) and the natural resources of a society.

Economy in Sugar Mill Sector:

It is a high-value cash crop that has significance for sugar industries in Pakistan. It contributes
about 0.6% to the GDP and 2.9% of the total value added in agriculture. It creates huge revenue
for the government and is used as a source of energy/power.
Free economy:
“A free market economy is one where supply and demand regulate production and labor as
opposed to government intervention. Most countries' economies contain elements of both free
market and command economies.”
Economy in pakistan:
The government system is a federal parliamentary republic; the chief of state is the president, and
the head of government is the prime minister. Pakistan has a mixed economic system with a
combination of free-market activity and government intervention.
Loans :
The State Bank’s Statistical Bulletin for January 2022 revealed that the sugar sector’s infection
ratio of loans rose to 29.1 % in 2021. The infection ratio has been increasing in each quarter —
from 16.37 % in the first quarter to 19.8% in the second quarter of the same year.
Currency And Exchange :
Actual Previous Highest Lowest Dates

287pkr 287pkr 298pkr 56.20pkr 2001 – 2023

The USDPKR spot exchange rate specifies how much one currency, the USD, is currently worth in
terms of the other, the PKR. While the USDPKR spot exchange rate is quoted and exchanged in the
same day, the USDPKR forward rate is quoted today but for delivery and payment on a specific
future date.

Poitical condition:
Democratic:
“Full democracies are nations where civil liberties and fundamental political freedoms are not
only respected but also reinforced by a political culture conducive to the thriving of democratic
principles”.
Autocratic :
“Autocracy is a system of government in which absolute power over a state is concentrated in the
hands of one person, whose decisions are subject neither to external legal restraints nor to
regularized mechanisms of popular control (except perhaps for the implicit threat of a coup d'état
or other forms of rebellion).”
Pakistani democracy:
“Pakistan constitutionally is a democratic parliamentary republic with its political system based
on an elected form of governance. Since the establishment of the current system in 2003,
Pakistan is one of the youngest democracies in the world.”

2022–2023 Pakistan political situation:

The 2022–2023 Pakistan political unrest is an ongoing series of political crises after the ousting
of former Prime Minister Imran Khan through a no-confidence motion in April 2022.The crises
began in 2022 when the opposition joined hands and submitted a no-confidence motion against
Imran Khan's government in the National Assembly. Prime Minister Imran Khan urged
the Pakistani establishment not to stay neutral and play its role to save his government and not let
historical rival politicians with alleged corruption charges take over,but the establishment
refused. After his ouster, Imran Khan called for early general elections, for which calls escalated
after the Khan-led PTI dissolved two of its provincial assemblies (Punjab and KP), triggering
elections in 60% of the country due on 30 April 2023 and 28 May 2023, respectively. Khan's
calls received a broadly positive response from the general public, with a Gallup survey
declaring Imran Khan as the most popular current political leader in Pakistan, with 61% of
Pakistanis having a positive opinion about him, followed by 36% for the PML-
N supremo Nawaz Sharif and Foreign Minister Bilawal Bhutto-Zardari, respectively. Imran
Khan was arrested by the police from Islamabad High Court on 9 May 2023. Khan's arrest led to
a nationwide protest by his supporters. PTI supporters had reportedly indulged into violence to
stage their protest against this arrest. Social media platforms including Twitter, Facebook and
others were blocked in the country.

Self conclusion:
Pakistan continues to face multiple sources of internal and external conflict. Extremism and
intolerance of diversity and dissent have grown, fuelled by a narrow vision of Pakistan’s national
identity, and are threatening the country’s prospects for social cohesion and stability.
The inability of state institutions to reliably provide peaceful ways to resolve grievances has
encouraged groups to seek violence as an alternative. The country saw peaceful political
transitions after the 2013 and 2018 elections. However, as the country prepares for anticipated
elections in 2023, it continues to face a fragile economy along with deepening domestic
polarization. Meanwhile, devastating flooding across Pakistan in 2022 has caused billions in
damage, strained the country’s agriculture and health sectors, and also laid bare Pakistan’s
vulnerability to climate disasters and troubling weaknesses in governance and economic stability.

Legal (laws & regulations):

The law of Pakistan is the law and legal system existing in the Islamic Republic of Pakistan.
Pakistani law is based upon the legal system of British India; thus ultimately on the common law
of England and Wales.
Following the establishment of the Dominion of Pakistan in 1947, the laws of the erstwhile
British Raj remained in force. At no point in Pakistan's legal history was there an intention to
begin the statute book afresh. The founder of Pakistan, Muhammad Ali Jinnah had a vision
regarding the law of Pakistan, to implement a system in accordance to Islamic teachings, but it
was never fulfilled. This vision, however, did have a lasting effect on later Pakistani lawmakers.
During the reign of General Muhammad Zia-ul-Haq, elements of Islamic Sharia law were
incorporated into Pakistani law, leading to the institution of a Federal Shariat Court (FSC). In
some Federally and Provincially Administered Tribal Areas [(FATA) and (PATA)], a system of
law employing traditional methods, which persists at the local level. At this informal level,
disputes are settled by a jirga, a council of tribal elders.

Defined law:
a binding custom or practice of a community : a rule of conduct or action prescribed or formally
recognized as binding or enforced by a controlling authority.
(2) : the whole body of such customs, practices, or rules. The courts exist to uphold, interpret,
and apply the law.
Presidence law:
Legal precedents are when a case's circumstances and legal requirements match those of a
contemporary legal dispute; unless a party can demonstrate that it was incorrectly resolved or
that it differed materially, the precedent will typically govern the outcome of a later similar case.
Type of law In Pakistan:
(Common Law)
The legal system of Pakistan is based on the common law system of England and the United
States. The publication of laws, regulations, and reporting systems is in English.
The law of Pakistan is the law and legal system existing in the Islamic Republic of Pakistan.
Pakistani law is based upon the legal system of British India; thus ultimately on the common law
of England and Wales.
Implementation Of Law:
Yes we implement laws.

Legislation :
“The National Assembly of Pakistan is the country's sovereign legislative body. It embodies the
will of the people to let themselves be governed under the democratic, multi-party Federal
Parliamentary System.”

Stages
A bill must go through the following steps (in both Houses) to become law:

 First reading: Bill arrives.

 Second reading: Main debate on purpose and key areas of the bill.
 Committee stage: Detailed line by line scrutiny of the text with amendments (proposed
changes). Votes may take place to decide whether to make the changes.
 Report stage: Further examination of the text. More amendments are debated and further
votes take place to decide whether to make the changes.
 Third reading: After clause by clause consideration of the Bill, the member-in-charge of
the Bill can move a motion that the Bill (or the Bill, as amended, as the case may be) be
passed. At this stage, the debate is confined to arguments either in support or for rejection
of the Bill without referring to the details thereof.
 Presidential Assent: When both Houses agree the final content, a bill is assented by the
Parliament and becomes a law or ‘Act of Parliament’
Sugar Mills In Pakistan:
Sugar industry is one of the major industries in Pakistan. According to Pakistan Sugar Mills
Association (PSMA), there are 87 sugar mills operating in the country as of 2021. These mills
are present mainly in Punjab and Sindh, where sugarcane cultivation is in concentration. The
total crushing capacity of these mills is estimated at 6.8 million tons per day.
Reserves and demand :
Pakistan’s 2021/22 sugar production is forecast at 6.8 million metric tons (MMT), up 14 percent
from the current year’s revised estimate, due to significant increases in area and sugarcane
yields. Sugar consumption for the same year is forecast at 5.9 MMT, three percent higher than
last year’s estimates and exports are forecast at 800,000 tons. 2020/21imports are estimated at
350,000 tons mainly to control rising prices and build up supplies. To facilitate the availability of
sugar to end users the government has eliminated all duties on sugar imports. Sugar prices
increased 21 percent since last year due to tight supplies in the market. Instability in sugar
availability for end users and sugar prices is expected to continue mainly due to government
pricing and management policies influencing the decisions of sugar producers to distribute
product. Ending stocks are projected at 2.4 MMT.
Production Graph

Flexibility:
Currently, Pakistan is termed as amongst top 20 countries in terms of area under cultivation of
the sugar cane crop, and production, however, this top ranking takes a nose dive, when actual
yield is considered worldwide. At the moment, approximately 72 sugar mills are operating in
various parts of the country to cater to the needs of people. Sugar apparently is also the second
most important cash crop in Pakistan after wheat. Despite having this self sufficient production,
Pakistan has to import sugar, which exposes it to the effects of shortage and rising prices in the
world.
Self conclusion about investment in Pakistan :
Pakistan is a country full of potential and opportunities, especially when it comes to investing.
The stock market, real estate, bonds, and other investment options offer a wide range of
opportunities for investors to grow their wealth. However, investing in Pakistan also comes with
its own set of risks and challenges.
The paper critically evaluates investment climate in Pakistan. It covers incentives given by the
government to domestic and foreign investors. Special emphasis is placed on identifying the
barriers that discourage investment in Pakistan. Major impediments include high doing business
cost, political instability, corruption, government bureaucracy, inconsistent government policies,
and poor law and order situation. The paper also highlights some international best practice
solutions to encourage investment in the country. Pakistan should attach short-term priority to
attracting investment to foreign exchange earning sector or at least both the foreign exchange
earning sector and other sectors simultaneously.