The government is preparing to introduce a legally secure framework aimed at strengthening the protection of foreign direct investment (FDI) and restoring investor confidence, as part of the proposed National Industrial Policy. The framework is designed to empower the Prime Minister’s Office to issue directives safeguarding foreign investors from undue interference by investigation agencies, including the National Accountability Bureau (NAB) and the Federal Investigation Agency (FIA).
According to official sources, the proposed policy will enable the Prime Minister’s Office to intervene when necessary to ensure that foreign investors are not subjected to coercive or disruptive actions while conducting legitimate business activities in Pakistan. The initiative reflects growing concern within the government that discretionary enforcement powers and overlapping jurisdictions have discouraged foreign capital inflows and undermined industrial growth.
In parallel, the government plans to establish a National Industrial Revival Commission (NIRC), which will serve as a central forum for addressing disputes and regulatory issues related to industrial and investment activity. Under the proposed framework, investigation agencies will be restricted from initiating actions against companies while proceedings are underway at the commission, providing investors with procedural certainty and protection from parallel enforcement actions.
Sources familiar with the proposal said the new industrial policy will include explicit provisions allowing the Prime Minister’s Office to issue binding directives for the protection of FDI and foreign investors. For the purposes of the policy, a foreign investor will be defined as a foreign company, any natural person who is not a citizen of Pakistan, or a person holding a National Identity Card for Overseas Pakistanis.
Under the proposed amendments, no coercive action would be permitted against a foreign investor in relation to any regulated activity or regulated securities activity without prior approval from the Prime Minister’s Office or another authority notified under the industrial policy. This measure is intended to provide legal cover to foreign investors and reduce uncertainty arising from uncoordinated enforcement actions by multiple agencies.
Sources indicated that draft amendments have already been prepared and agreed in principle with the Securities and Exchange Commission of Pakistan (SECP). These amendments are intended to curb undue interference by authorities such as the Federal Board of Revenue, NAB, and FIA, particularly in cases involving regulated entities operating within the capital markets and industrial sectors. The new provisions are designed to supplement existing laws and regulations governing the protection of foreign investment.
The policy proposes safeguards to prevent harassment of regulated persons and foreign investors engaged in lawful business activities. Officials believe that reducing regulatory overreach will encourage capital market development and attract long-term investment. To ensure enforceability, a penal provision has been incorporated into the policy to deter unauthorised or unlawful interference in matters falling within the jurisdiction of the NIRC.
Under the proposed framework, no authority would be permitted to take actions that impair or disrupt regulated business operations, including the seizure of property or records, sealing of premises, or arrest of personnel, without the required approvals. However, cases already pending before courts prior to the commencement of the amendment would continue without reference to the commission. Any violation of the new provisions could result in simple imprisonment of up to 30 days or a fine of up to Rs1 million, subject to judicial determination.
Officials acknowledged that existing legal and regulatory systems allow excessive discretion, often resulting in over-interference and punitive actions that erode investor confidence and hinder economic growth. To address these concerns, the proposal recommends the development of more balanced enforcement instruments under the Anti-Money Laundering Act 2010.
The proposed reforms also call for strengthening the national anti-money laundering and countering financing of terrorism framework by introducing safeguards that protect customer rights and regulated entities, while limiting enforcement powers in the absence of substantiated grounds. Amendments to Sections 41B and 42A of the SECP Act 1947 have been proposed, including mandatory SECP approval before law enforcement agencies can initiate action.
Beyond regulatory protections, the draft policy outlines broader financial and industrial reforms. These include enhanced utilisation of the Export Financing Surcharge facility, requiring banks to justify refusals and consider lower rates. The exporter credit framework is proposed to allow business-to-business letters of credit, invoice-backed financing, and credit risk insurance, while eliminating personal guarantees from company directors.
Additional measures include reducing capital adequacy risk weights for medium-sized firms, introducing sector-specific bonds to enable long-term financing, improving access to digital payment gateways, strengthening the venture capital ecosystem, easing reinsurance procurement for the Export-Import Bank, and reviving debt resolution mechanisms for financially distressed industrial units.
Collectively, the proposed legal and policy measures signal the government’s intent to address long-standing investor concerns, improve regulatory predictability, and create a more secure environment for foreign investment as part of Pakistan’s broader industrial revival strategy.
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