Bad governance tops concern for investors: OICCI survey

Power shortage, law and order and inflation also create hurdles.

KARACHI:

Bad governance is the top concern of Overseas Investors Chamber of Commerce and Industry (OICCI) members as 29 per cent of respondents of a survey believe that this is the main hindrance in economic growth of the country.

Results of the fourth-quarter survey, conducted by OICCI from December 2010 to February 2011, show that other top concerns for overseas investors were power crisis, law and order, inflation and corruption.

Power shortage, inflation and corruption were major irritants for 15 per cent of the respondents, while 13 per cent saw law and order as a big hurdle.

However, business confidence was gradually showing signs of improvement as the economy struggled to come out of the abyss it had been caught over the past nine months, the survey said.

Confidence levels were moving upwards from minus 27 per cent and minus 26 per cent in earlier quarters to the current minus 24 per cent, said OICCI President Naved A Khan, adding that this sense of optimism, albeit limited, in the current economic scenario was a ray of hope and a step towards achieving the economy’s potential.

Business Confidence Index

The fourth quarter Business Confidence Index (BCI) clearly indicated that while business sentiment was relatively better at the beginning of 2010 when organisations were laying out plans for upcoming months, it fell short of expectations in the second quarter.

The second quarter survey was conducted immediately after the budget, which may have contributed to lowering confidence levels. Likewise, the devastating floods may have dampened spirits in the third quarter.

The index has also tried to delve into the reasons for the slow recovery. According to BCI which is based on responses from heads of multinationals to owners of small businesses in busy city districts, governance was the major obstacle in the healing process.

Pre-budget suggestions

With the budget around the corner, the survey sought suggestions for improving the taxation system. Respondents suggested that the government should facilitate the segment that was already paying taxes along with imposition of tax on privileged segments.

Broadening of tax base and proper policy implementation were also recommended. The results strongly hinted at the growing resentment in the business community as a result of being over-burdened by taxes, especially when certain well-to-do sectors enjoyed tax amnesty.

Published in The Express Tribune, May 12^th, 2011.