Promoting Private Investment Foreign investors face a lower rate of corporate income tax at 20 percent. There are no restrictions on repatriation of profits. Also, there is no law regulating transfer pricing in Pakistan. The final stage of the CPEC involves the promotion of foreign investment in the SEZs, especially by China, by the offering of attractive fiscal incentives. The objective is to place Pakistan better in global value- added chains and thereby give a fillip to exports. 15.3. Constraints to Higher Private Investment The determinants of private investment and their impact on the growth rate of private investment have been derived by historical econometric analysis of data from 1990-91 to 2018-19. The findings are given above in Table 15.3. Table 15.3: Determinants of Private Investment 1% Change in Impact on growth rate of Private Investment (%) GDP 1.052 Real Interest Rate*-0.931 Relative Price of Capital Goods**-0.088 Public Investment 0.262 Level of Corporate Profitability*** 0.332 *The impact is with respect to 1%-point change. The real interest rate is the nominal interest rate on bank loans minus the rate of inflation. **ratio of the unit value index of capital goods to the domestic price level. ***rate of return on equity post-tax. Source: Estimated The Table reveals that the five determinants of the growth in private investment are the growth rate of GDP, change in the real interest rate, change in the relative price of capital goods, growth in the level of public investment, especially in economic infrastructure, and the level of corporate profitability. 15.4. Reviving Private Investment Appropriate mix of Policies : For an upsurge in private investment there is need for a combination of the following factors: i) A favorable business environment, especially in terms of buoyancy in growth of ag­gregate domestic demand and exports and predictability and consistency of econom­ic policies. 147