Olson asks for expediting approval of Arif Habib’s investment in US. PHOTO: AFP

ISLAMABAD: As Pakistan moves to regulate foreign funding of non-governmental organisations under its National Action Plan to counter terrorism, Islamabad has run into concerns from an unexpected source: the United States. US Ambassador to Pakistan Richard Olson met with Finance Minister Ishaq Dar on Wednesday to address some of Washington’s concerns with the proposed new regulations.



“The views of relevant stakeholders and donor agencies should be sought before finalisation of the draft law,” Olson was quoted as saying by the Finance Ministry. Olson said that this would remove the feelings of unease among foreign donors.



The US ambassador expressed these concerns on behalf of local and foreign NGOs that have been worried about high-handedness by government agencies during the registration and monitoring processes for NGOs, many of which are funded by institutions based in the United States, including the US government. Islamabad is in the process of finalising the draft of Foreign Contributions Act aimed at regulating foreign funding. In many cases, the government does not have any records of foreign funding at all.



Dar said that the Economic Affairs Division of the Finance Ministry was working on the draft law for registration and was in contact with donor agencies and international NGOs and seeking their views. He said that all efforts would be made to craft a balanced piece of legislation.



The proposed draft calls for imprisonment for several violations of the law. The government is proposing a one year jail sentence for concealment of foreign contributions. Local and international NGOs would be required to sign a Memorandum of Understanding, assuring the government that they would work within their jurisdictions and will abide by all Pakistani laws.



The Securities and Exchanges Commission of Pakistan was also in the process of scrutinising the record of NGOs already registered. It has recently revoked licences of about 108 such organisations which it deemed were not fulfilling the SECP’s requirements. The SECP has also sought details of bank accounts of these organizations from the State Bank of Pakistan, said SECP chairman Zafar Hijazi.



Arif Habib Group investment



Olson also raised the issue of delay in giving formal approval to the Arif Habib Group, a financial and industrial conglomerate, to make a $300 million investment in the United States. Dar had already agreed, in principle, to allow the Fatima Fertilizer to raise $300 million from international debt markets and invest as equity in a subsidiary called the Midwest Fertilizer in the US state of Indiana.



However, final approval is needed from the Economic Coordination Committee (ECC) of the Cabinet, but the Finance Ministry has not yet formally sought the ECC’s approval. The US ambassador’s intervention highlights Washington’s interest in the project that is expected to generate jobs in an economically depressed area of the United States.



Fatima Fertilizer, the Arif Habib subsidiary that is managing the investment, would issue the seven-year bonds in international markets to raise debt for the initial investment in Midwest Fertilizer. The bonds would be backed by the State Bank of Pakistan (SBP).



Fatima Fertilizer will have a 35% shareholding in Midwest Fertilizer along with management control. The remaining ownership will rest with a consortium of international investors. The plant’s expected production capacity is said to be 2.4 million tons and it will cost $2.4 billion to build.



Speaking to The Express Tribune, Arif Habib, the eponymous chairman of the conglomerate, said that he had also met with Dar last week, urging him to formalise ECC approval at the earliest.



The US ambassador also raised the issue of FBR’s decision to deny input tax adjustments to US firm, Caterpillar. The minister assured Olson that he had already issued instructions to the FBR to look into this issue and the matter would be resolved in due course.



The US Ambassador also asked Dar to press for an extension in the date for tariff determination by the Oil and Gas Regulatory Authority for two oil exploration companies financed by the United States Overseas Private Investment Corporation (OPIC) as they needed more time to achieve financial close.



Published in The Express Tribune, April 9th, 2015.