Boosting investment: OICCI flummoxed at falling FDI ‘despite many positives’

Urges government to implement TRC recommendations to reduce tax rates.

LAHORE: Besides various economic stabilisation measures taken since 2013, improved security situation in Karachi and better management of energy supply has contributed to increasing business confidence, said the Overseas Investors Chamber of Commerce and Industry (OICCI).

“Considering the many positives of Pakistan like improving GDP growth, various incentives offered to the local and foreign investors, a very large middle class of roughly 70 million, record low level of inflation and interest rates, improved foreign reserves and slowdown in competing commodity-based economies, we fail to understand as to why the country fails to attract large inflow of investment,” said the OICCI members, expressing surprise.

OICCI President Shahab Rizvi said one of the key bottlenecks was the lack of predictable, transparent and consistent implementation of policies, which sometimes deterred potential new investors from making major commitments in the country.

“At the same time, the OICCI members who have been operating in Pakistan for many years and know the environment and potential of the country continue to invest large funds, roughly over $1 billion annually,” he added. “OICCI members employ over a million people and contribute about one third of the total tax revenues of the country.”



He also referred to OICCI’s recent Business Confidence Index, supported by an equally bullish feedback from foreign investors operating in Pakistan in the OICCI Perception Survey, released in early 2016. “It gives a positive indication of the improving economic environment and investment potential in Pakistan.”

Rizvi recommended the government to engage the best experts from within and outside the country and even invite international consultants to advise on boosting long-term investments in export-based industries in Pakistan.

“In recent budget proposals to the Federal Board of Revenue (FBR), the OICCI proposed that the tax policies, which lead to long-term investments, should be protected for at least ten years phasing-out period,” said OICCI Secretary General Abdul Aleem.

He said the proposal highlighted the need to aggressively broaden the tax base, improve documentation of the economy.

“The OICCI has also urged the government to implement Tax Reform Commission recommendations to reduce tax rates and number of taxes to facilitate economic activity and investment,” said Aleem.

“We have also shown concern at the ineffective protection of ‘Intellectual Property Rights’ comprising of patents, trademarks and copyrights and have asked for a rapid and effective implementation of the Intellectual Property Act 2012 including functioning of the IPR Tribunals,” he added.

“There is also a need for structured accountability of various government departments on economic investment issues. A regular, at least quarterly, formal dialogue between the government including provincial governments and leading business chambers should take place to remove impediments in economic growth and investment,” said the OICCI members.

Published in The Express Tribune, March 23^rd, 2016.

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