KARACHI: Although foreign investors in Pakistan are concerned over the sluggish business activity, still a vast majority is optimistic over the growth potential of the country. This optimism means they are likely to recommend parent companies to enhance foreign direct investment (FDI) in Pakistan.
This was the conclusion of the Perception and Investment Survey 2019 conducted by the Overseas Investors Chamber of Commerce and Industry (OICCI). The survey results shed light on both the concerns of the business community on the current business environment as well as the confidence of OICCI members on the growth potential of the country.
OICCI President Shazad Dada pointed out that the survey showed that foreign investors remained positive on a number of business climate parameters of Pakistan and were upbeat on the performance of their respective business entities in the country.
In fact, 75% of the respondents were willing to recommend their parent companies to enhance foreign direct investment in Pakistan.
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“While foreign investors, participating in the survey, have displayed concerns over some areas relating to the ease of doing business in Pakistan, the case for business growth potential and opportunities in the country is supported by over 70% survey respondents,” he said. “This indicates their plans to enhance investment over the next five years.”
He pointed out that in the past two years OICCI members had reinvested $2.5-3 billion in Pakistan annually as new capital expenditure.
OICCI members indicated that compared to the previous 2017 survey, the federal government is better engaged with stakeholders on policy issues and its senior functionaries appear to have a better understanding, and commitment to resolve investors’ issues. A number of economic disciplinary measures, announced by the government last year, such as the partial withdrawal of incentives on new investments affected the business operations of OICCI members.
Delayed action on some other key concerns like inter-provincial coordination issues, matters pertaining to the renewal of cellular mobile operators’ licenses and delay in processing corporate remittances have been flagged as concerns for many businesses.
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Furthermore, nearly 30% devaluation of the rupee against the US dollar, increase in the interest from 6.5% in July 2018 to 13.25% in the third quarter of 2019 caused a hike in the overall cost of doing business.
Two key issues pointed out by the foreign investors were overdue tax refunds, amounting to around Rs80 billion and the ballooning circular debt of the energy sector which remained largely unresolved.
According to the survey, more than 70% foreign investors/OICCI members were partially satisfied with the “policy framework” relating to business but had concerns over the implementation of policies.
Published in The Express Tribune, February 7th, 2020.
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