In this article, we examined the constitutional and statutory framework governing the Special Investment Facilitation Council (SIFC), with a particular focus on its mandate, legal authority, and practical limitations in facilitating investment across federal and provincial jurisdictions. We assessed whether the existing structure of SIFC is capable of delivering effective single-window facilitation, or whether constitutional constraints continue to undermine investor confidence and coordinated economic development in Pakistan.
With an intention to streamline Pakistan’s sluggish investment climate and to improve the investor confidence, the Federal Government established Special Investment Facilitation Council (SIFC) in 2023. The mandate of SIFC is to fast-track investments and remove the bureaucratic hurdles for both local and foreign investors by acting as a single-window facilitator.
SIFC was created to bring stakeholders from all civil and military leadership closer by ensuring institutional coordination and political backing. In reality, the constitutional limitations of SIFC cannot remain hidden, especially when it comes to directing the provinces for investment facilitation.
An amendment in 2023 to the Board of Investment Ordinance, 2001, led to the creation of SIFC. With this amendment, Chapter II A was added into the Ordinance, which provided the legal foundation for the establishment of SIFC. It was created as a federal initiative aimed at coordinating investment in key economic arenas such as energy, agriculture, tourism and minerals etc.
However, most of these investment sectors are outside of the Federal Legislative List in the Fourth Schedule of the Constitution of Pakistan, 1973. The Fourth Schedule lists the subjects on which the federal government can legislate. Subjects like tourism and minerals come under the exclusive jurisdiction of provinces after the 18th Amendment to the Constitution. This legal reality leads to the creation of friction between the constitutional autonomy of the provincial governments and the federal vision of centralized facilitation.
It is crucial to understand that the SIFC, with its high-profile structural framework, is in fact a federal body. Section 10E, which was added after the amendment to the BOI Ordinance, gives powers to the SIFC to issue directions only to federal regulatory bodies, divisions, departments or public sector entities. This section does not give any legal power to the SIFC to direct provincial governments to act in investment facilitation. Although this distribution of power is crucial to uphold the autonomy of the provinces, it creates obstacles in the way of economic development and investment planning.
This becomes a serious limitation when an investment project requires provincial action for facilitation. When the SIFC reaches out to the provinces for no-objection certificates (NOCs), land allotments, environmental clearances or other such permissions, the provinces refuse to cooperate stating that the SIFC lacks authority for direction.
This institutional disconnect leads to real world consequences. Local and foreign investors looking to invest in the tourism project in Khyber Pakhtunkhwa and Gilgit Baltistan or the mining sector in Balochistan, find themselves in a bureaucratic deadlock.
Foreign investors are attracted based on the notion that Pakistan offers a one-stop facilitation, however, in reality, the investor faces inconsistent coordination and fragmented authority. This leads to discouraging future investments in the country. In a world where there is market competition to attract foreign investors, such unnecessary bureaucratic hurdles can prove fatal to improving Pakistan’s deteriorating economic ambitions.
To resolve the issue, the Parliament could amend the Ordinance and empower the SIFC to issue binding directions to the provinces. However, doing this will lead to serious constitutional concerns and may trigger political resistance.
Initiating such an amendment could be considered as undermining the 18th Constitutional Amendment, which was a major step in provincial autonomy and empowerment. It could also lead to legal challenges on the ground of federal overreach.
Another option is to strengthen the intergovernmental coordination without amending the Ordinance. A constitutional forum, the Council of Common Interests (CCI), has powers to resolve federal-provincial issues. CCI can play a crucial role in resolving the issue and aligning national investment priorities.
However, traditionally, the doors of CCI have only been knocked on to settle disputes between federation and provinces. It is not designed to support the kind of ongoing, day-to-day collaboration needed to facilitate investment projects. The current format of CCI which is based on meeting infrequently and focusing on high-level policy issues, does not support a continuous and a sector specific engagement that is often required for investor facilitation.
Unless the center and provinces come together to devise a framework, the very mandate of a one window-facilitation body like the SIFC may be undermined by structural inefficiencies and jurisdictional disputes. Currently, SIFC’s promise for seamless facilitation is undermined by lack of power to direct the provinces.
The requirement of investors goes beyond policy declarations. The need is for a practical structure that works, across all governments. The delay in resolving the issues gives the international investors the chance to look for avenues elsewhere.
The single window facilitation idea of SIFC is inviting however, without the real intergovernmental cooperation, it remains just an idea. There is a need to resolve the center-provincial authority issue if it wishes to compete for foreign investments globally.
If not, the very obstacles which the SIFC was to remove may become more insuperable, leading to deteriorating investor confidence and effecting Pakistan’s economic recovery.
