Policy On Equity Investment Abroad Simplified 

Reform Description  

After: Now the residents of Pakistan including firms and companies are allowed to make equity-based investment in entities abroad on repatriable basis, and decision has been delegated to banks for different categories. 

Details 

•  Foreign Exchange (FE) Manual had strict regulation for equity investment abroad which discouraged the businesses to invest in foreign countries.  

Analysis 

• The need of simplified policy to facilitate equity investment abroad was highlighted, which should facilitate the business community. 
• Prime objective of this policy is to promote ease of doing business, exports, and facilitate resident companies in raising capital from abroad and meet the legitimate investment needs of individuals.  

Solution  

• SBP with the approval of the Federal Govt. (through the ECC of Cabinet) has simplified the process of equity investment abroad. 
• Accordingly, policy for equity investment abroad (Chapter 20, Para 13 of Foreign Exchange (FE) Manual) has been revised.  
• Now, four categories have been introduced in the policy and decision to allow remittance for equity investment by the residents of Pakistan including firms and companies in entities abroad on repatriable basis is delegated to banks in 3 out of 4 categories.  
• The policy was formulated after holding extensive consultative sessions with all relevant stakeholders such as; P@SHA, Software exporters, Pakistan Business Council, Venture Capital Firms, Startups etc. 
• The same policy was disseminated to banks on February 10, 2021 through FE Circular No. 1 of 2021.   

https://www.sbp.org.pk/epd/2021/FEC1-Annex-A.pdf