Act XLII of 1976 · 4 pages
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THE FOREIGN PRIVATE INVESTMENT (PROMOTION AND
PROTECTION) ACT, 1976
CONTENTS
1. Short title, commencement and application.
2. Definitions.
3. Field for foreign private investment.
4. Approval of Foreign Private Investment.
5. Protection of agreements.
6. Repatriation facilities.
7. Remittances by foreign employees.
8. Tax concession and avoidance of double taxation.
9. Equal treatment.
10. Removal of difficulties.
11. Power to make rules.
12. Repeal.
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THE FOREIGN PRIVATE INVESTMENT (PROMOTION AND
PROTECTION) ACT, 1976.
1
ACT NO. XLII OF 1976
[4th June, 1996]
An Act to provide for the promotion and protection of foreign private investment in Pakistan.
WHEREAS it is expedient to provide for the promotion and protection of foreign private
investment in Pakistan, and for matters ancillary thereto;
It is hereby enacted as follows:—
1. Short title, commencement and application.—(1) This Act may be called the Foreign
Private Investment (Promotion and Protection) Act, 1976.
(2) It shall come into force at once.
(3) It shall apply to all industrial undertakings in Pakistan having foreign private investment
established with the approval of the Federal Government after the first day of September, 1954:
Provided that nothing in this Act shall be in derogation of any facilities or protection
specifically sanctioned by the Federal Government to foreign private investment in the case of a
particular industrial undertaking or a class of industrial undertakings or such facilities or protection as
may be available to foreign private investment under a bilateral investment treaty.
2. Definitions.—(1) In this Act, unless there is anything repugnant in the subject or context,—
(a) “foreign capital” means investment made by a foreigner 2[or by a person who,
being a citizen of Pakistan, is also the citizen of any other country] in an
industrial undertaking in Pakistan—
(i) in the form of foreign exchange, imported machinery and equipment, or
(ii) in any other form which the Federal Government may approve for the
purpose;
(b) “foreign private investment” means investment in foreign capital by a person
who is not a citizen of Pakistan 1[or who, being a citizen of Pakistan, is also the
citizen of any other country] or by a company incorporated outside Pakistan,
but does not include investment by a foreign Government or agency of foreign
Government;
(c) “industrial undertaking” means an industry, undertaking or establishment
engaged in the production, distribution or processing of any goods, the
providing of services specified in this behalf by the Federal Government or the
development and extraction of such mineral resources and products as may be
specified in this behalf by the Federal Government 2[but, for the purpose of
investment by a person who, being a citizen of Pakistan, is also the citizen of
any other country, does not include an undertaking or establishment engaged in
providing banking or insurance services].
1
For Statement of Objects and Reasons, see Gaz., of P., 1976, Ext., Pt. Ill, p. 392.
2
Ins. by the Foreign Private Investment (Promotion and Protection) (Amdt.) Act. 1993 (4 of 1993), s. 2.
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(2) Words and expressions used but not defined in this Act shall have the same meanings as in
the Companies Act, 1913 (VII of 1913).
3. Field for foreign private investment.—The Federal Government may consistent with the
national interest, for the promotion of foreign private investment, authorise such investment in any
industrial undertaking—
(a) which does not exist in Pakistan and the establishment whereof in the opinion
of the Federal Government, is desirable; or
(b) which is not being carried on in Pakistan on a scale adequate to the economic
and social needs of the country; or
(c) which will contribute to—
(i) the development of capital, technical and managerial resources of
Pakistan;
(ii) the discovery, mobilisation or better utilization of the national resources;
(iii) the strengthening of the balance of payments of Pakistan;
(iv) increasing employment opportunities in Pakistan; or
(v) the economic development of the country in any other manner.
1[4.
Approval of Foreign Private Investment.—Any sanction granted by the Federal
Government for investment in an industrial undertaking shall be subject to the following conditions
and to such other conditions as the Federal Government may specify, namely:—
When the foreign private investment is by a person who, being a citizen of Pakistan, is also the
citizen of any other country, he shall deposit the entire amount of repatriable foreign investment in a
foreign exchange account in Pakistan for its subsequent use for the purchase of machinery and other
fixed assets of the undertaking”.
5. Protection of agreements.—(1) Where the Federal Government considers it necessary in
the public interest to take over the management of an industrial undertaking having foreign private
investment or to acquire the ownership of the shares of citizens of Pakistan in the capital of such
industrial undertaking, any agreement approved by the Federal Government relating to such
undertakings entered into between a foreign investor or creditor and any person in Pakistan shall not
be affected by such taking over or acquisition.
(2) Foreign capital or foreign private investment in an industrial undertaking shall not be
acquired except under due process of law which provides for adequate compensation therefor to be
settled in the currency of the country of origin of the capital or investment and specifies the principles
on and the manner in which compensation is to be determined and given.
6. Repatriation facilities.—Subject to the provisions of the Foreign Exchange Regulation
Act, 1947 (VII 1947).
l
Subs. by the Foreign Private Investment (Promotion and Protection) (Amdt.) Act, 1993 (4 of 1993), s. 3, for section 4.
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(a) a foreign investor in an industrial undertaking established after the 1st day of
September, 1954, and approved by the Federal Government, may at any time
repatriate in the currency of the country from which the investment originated—
(i) foreign private investment to the extent of original investment;
(ii) profits earned on such investment; and
(iii) any additional amount resulting from the reinvested profits or
appreciation of capital investment; and
(b) a creditor of an industrial undertaking referred to in clause (a) may repatriate
foreign currency loans approved by the Federal Government and interest
thereon in accordance with the terms and conditions of the said loan:
Provided that nothing in this section shall affect the terms of the permission to make such
investment granted to a foreign investor before the commencement of this Act.
7. Remittances by foreign employees.—Foreign nationals employed with the approval of
the Federal Government in any industrial undertaking having foreign private investment may make
remittances for the maintenance of their dependents in accordance with the rules, regulations or orders
issued by the Federal Government or the State Bank of Pakistan.
8. Tax concession and avoidance of double taxation.—(1) The Federal Government may
allow such concessions to industrial undertakings having foreign private investment as may be
admissible under any law for the time being in force.
(2) Foreign private investment shall not be subject to other or more burdensome taxes on
income than those applicable to investment made in similar circumstances by citizens of Pakistan.
(3) Foreign private investment shall be allowed all the tax concessions which may be
admissible on the basis of any agreement for avoidance of double taxation which the Government of
Pakistan may have entered into with the Government of the country of origin of such investment.
9. Equal treatment.—Industrial undertakings having foreign private investment shall be
accorded the same treatment as is accorded to similar industrial undertakings having no such
investment in the application of laws, rules and regulations relating to importation and exportation of
goods.
10. Removal of difficulties.—If any difficulty arises in giving effect to any provisions of this
Act, the Federal Government may make such order, not inconsistent with the provisions of this Act,
as may appear to it to be necessary for the purpose of removing the difficulty:
Provided that no such power shall be exercised after the expiry of one year from the
commencement of this Act.
11. Power to make rules.—The Federal Government may, by notification in the official
Gazette, make rules for carrying out the purposes of this Act, and such rules may, among other matters,
provide for the employment of Pakistani and foreign nationals in industrial undertakings having
foreign private investment.
12. [Repeal]. Omitted by the Federal Laws (Revision and Declaration) Ordinance, 1981
(XXVII of 1981), s. 3 and Sch., II.
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Source: Pakistan Code, Ministry of Law and Justice (pakistancode.gov.pk). Text on this page is reproduced verbatim from the official PDF and is provided for reference only. For the authoritative version, always consult the source document or a current reported edition.
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