KARACHI: Despite the prevailing power crisis and security challenges, investments being made by multinationals operating in Pakistan have been growing and the trend is expected to continue in the future.
This was stated by Overseas Investors Chamber of Commerce and Industry (OICCI) General Secretary M Abdul Aleem, who added that member companies have continued to invest despite the ‘negative business climate of the country’.
With its head office in Karachi, OICCI represents 190 multinationals operating in Pakistan.
The country has been experiencing a low inflow of foreign direct investment (FDI) for the last five years, but the interest by multinationals is a positive for the economy.
“The OICCI member companies have continued to invest in Pakistan despite various negative geo-political and security factors that have impacted the country,” said Aleem. “They will continue to invest in the coming years.”
The official added that this can be judged from the fact that, in an ongoing survey of OICCI members, about 80 respondents have informed that their capital expenditure was Rs92 billion in 2011, Rs94 billion in 2012 and an average of similar amounts to be incurred on capital expenditure in 2013 and in the next 2-5 years.
Senior executives of multinationals in the country are of the view that the present government can easily increase the FDI in Pakistan by ‘just effectively’ implementing its current policies.
FDI in Pakistan was $1.44 billion in fiscal year 2012-13, almost one-fourth of the $5.4 billion it received in fiscal year 2007-08.
With such a low FDI base, experts say Pakistan should be able to bounce back strongly especially with a pro-business government being in power.
However, FDI in the first four months (Jul-Oct) of the current fiscal year in different sectors remained at $283.7 million, up 12.5% compared to $252.1 million recorded in the corresponding period of the previous year.
Though FDI in first four months grew slowly, leading investors, including OICCI members, are hopeful that the present government would better handle issues of governance and energy crisis.
Sectors in the limelight
Aleem also pointed out fast moving consumer goods (FMCGs) and financial services as sectors that could attract FDI. Investments are also expected to happen in oil and gas, telecommunication, tobacco, chemicals, pharmaceutical and IT sectors.
“Although these investments are lower than the potential of Pakistan, nevertheless these are a statement of confidence in the Pakistan market.”
According to analysts, one of the most attractive features for foreign investors is the growing middle class of Pakistan.
“Pakistan’s position as the sixth largest nation in terms of population and its 70 million middle class, which is increaseing, is a big factor for all business sectors and specially FMCGs.”
When asked what continues to draw foreign investors’ attention to Pakistani market, he said a lower cost of running business relative to most other countries, good supply of skilled and semi-skilled workforce, fewer regulatory controls, a freer economy than most third-world countries and effective banking regulations are a few strong points that make the country a good place to invest.
Published in The Express Tribune, December 10th, 2013.
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