Foreign investment misquoted: OICCI

Overseas chamber head believes inflow is at least double the stated amount.

KARACHI: The foreign direct investment (FDI) figure stated by the State Bank of Pakistan does not reflect the true level of investment by foreign investors in Pakistan, Overseas Chamber of Commerce and Industry (OICCI) President Humayun Bashir said on Monday.

“The central bank’s third quarterly report does not account the profits retained and reinvested by foreign firms operating in the country for acquisition of assets, whether tangible or intangible. Secondly, accumulated profits and reserves are also used by them to settle loan payments or increasing capital. This sum can be double counted as FDI, if the companies transfer money out of Pakistan to its shareholders and then remit it inward for new investments,” said in a statement.

Furthermore, a survey amongst OICCI members estimated the level of investments made by retained profits of its member companies’ rather than remitting abroad.

Survey analysis revealed that such investments during 2011 amounted to $1 billion approximately. OICCI would like to work hand in hand with the State Bank of Pakistan (SBP), Board of Investment (BOI) and Ministry of Finance to make sure that stated indirect foreign investment should also be recorded in FDI statistics appropriately, Bashir stated.

OICCI President was also confident that indirect foreign investments will boost up once Federal Board of Revenue (FBR) issues crucial clarification on investment made under the ‘tax credit for equity investment scheme’ under Income Tax ordinance proposed in last year’s budget.

The chamber has explained the hesitation of foreign investors due to unclear meaning of this investor friendly regulation and once reforms are made, entrepreneurs and multinational corporations will start pouring in to take advantage of the incentive by Pakistan for improving economic development and employment opportunities in the country.

Published in The Express Tribune, May 1^st, 2012.