Overseas chamber: OICCI chief terms foreign investment unsatisfactory

Offers help in establishing performance monitoring mechanism.

LAHORE: The Overseas Investors Chamber of Commerce and Industry (OICCI) has offered its help and expertise to Prime Minister Nawaz Sharif in instituting a structured performance monitoring and accountability mechanism for top business issues in order to build confidence of existing and potential local and foreign investors.

“We urge for more regular and meaningful engagement between the government and responsible private sector representatives,” said OICCI President Atif Bajwa on Wednesday. Bajwa thinks that the circumstances for doing business in Pakistan are not as bad as the world assumes. This is primarily due to negative perception of the country, resulting in restrictions on new investments despite good performance of existing investors and attractive policies.

“OICCI is a key stakeholder in attracting foreign direct investment (FDI) in Pakistan,” he said. “Its members invest an estimated $1 billion annually in the country.” Established in 1860, OICCI is the oldest chamber of commerce and industry in South Asia and represents a largest number (196) of foreign investors in Pakistan, belonging to 35 countries and operating in 14 key sectors of the economy. They contribute in excess of Rs700 billion, about one-third of the total tax revenue of Pakistan, and provide employment to an estimated one million people.

Commenting on the low level of FDI, Bajwa expressed concern and said $613 million FDI in the first eight months of the current fiscal year, as recently reported by the State Bank, is poor and not even 1% of the country’s GDP.

“This level of FDI is well below Pakistan’s capability and past performance,” he said. “Pakistan needs significantly higher FDI – at least 3% of GDP – to generate the desired level of economic growth and employment opportunities.”

Economists estimate that there is a need for five million new jobs every year to cater to the young population and the fast growth in the number of educated youth.

Highlighting some of the factors impeding FDI, the OICCI chief mentioned the continuing concern over security, the energy demand-supply gap and fast deteriorating position on the World Bank’s Ease of Doing Business (EODB) indicators besides the gap between the policy and its implementation. Moreover, inadequate protection of Intellectual Property Rights (IPR) was also a key deterrent to the new FDI in the country. It is regrettable, Bajwa said, that in an energy-starved country like Pakistan, the top two issues highlighted in the 2015 EODB report is not energy but taxation procedures and problems about contract enforcement.

“Surely this is not acceptable and one hopes that EODB concerns will be tackled on war footing,” he said.

OICCI is also concerned that some tax authorities are unduly holding back tax refunds of some 20 members, which in terms of value is less than 2% of their contribution to the exchequer, and sends wrong signals to the headquarters of foreign investors.

Published in The Express Tribune, March  26^th,  2015.

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