KARACHI: Inflation and energy shortages emerged as top concerns for businesspersons in a survey of business confidence conducted in November last year. However, fears over law and order eased somewhat.
Forty-three per cent of the businessmen surveyed pointed to inflation as their key concern while 39 per cent believed that electricity and gas shortage was the most biting problem, according to results of the fifth Business Confidence Index survey conducted by the Overseas Investors Chamber of Commerce and Industry (OICCI).
OICCI, which promotes foreign investment in the country and has 187 members, started conducting the business confidence survey in February-March 2010.
In the previous survey conducted in February last year, 36% saw inflation as a major concern while 31% cited electricity and gas outages as the top problem.
However, this time concerns over law and order eased as 19% of the respondents saw it as a big problem compared to 23% earlier.
Poor governance and poor policy implementation increased significantly as 26% of the respondents labelled it as a major concern, up from 16% in the last survey.
Business sentiment indicated stability as the Business Confidence Index stood at -25%, a marginal drop from -24% previously, and combined with other trends coming out of the survey, it indicated that the business community, despite concerns, was showing signs of some confidence.
The business community was of the opinion that the global economic situation had not improved. However, this did not seem to have impacted the respondents with respect to business situation in their respective companies.
According to the survey, business confidence of retailers showed a continuously improving trend with the index showing a reading of -62% compared to -76% in the previous survey and -84% in June 2010.
The services sector also indicated a significant improvement in business situation in their sector with a drop from -57% in the last survey in February 2011 to -43% in November 2011. They were even more positive in respect of the business situation of their own companies as the index fell from -35% to -19%.
Interestingly, though inflation is the foremost concern for the business community for the poor business environment, it also helps grow certain businesses.
Some 34% of businessmen expect their business to expand in the next six months whereas an equal number are contemplating no expansion and the remaining 32% are not sure about the direction.
However, 69% of the respondents plan to make capital investments, 64% expect sales to increase, 54% expect profits to rise and 47% see return on investments going up.
According to the survey, 31% of respondents were of the view that trade with India will impact business positively whereas 38% expect a negative impact.
However, 47% of the respondents were of the opinion that the revised Afghan transit trade agreement will negatively impact businesses, an opinion shared by 64% of manufacturers, whereas 19% gave a positive response.
Published in The Express Tribune, January 3rd, 2012.
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