Foreign investors indicate positive development plans for Pakistan for next few years, despite security, access to energy, governance

Karachi: Foreign investors and Overseas Investor Chambers of Commerce & Industry OICCI members indicated “positive” investment plans for Pakistan in next few years, despite issues of security, access to energy and governance. Moreover, there are concerns related to contract enforcement, tax refunds and intellectual property implementation in the country.

This is among key findings of 2011 Perception & Investment survey (conducted every other year) launched by OICCI here Thursday on data collected from its 189 members with over US$10 billion investment in Pakistan. President OICCI told newsmen that foreign investors operating in Pakistan are concerned with law and order situation, which is ranked as the “biggest challenge” facing the business community, closely followed by energy supply. Political instability and high inflation are other major challenges, he observed.

He stressed that survey findings should be taken seriously as they represent the collective voice of foreign investors who play a leading role in Pakistan’s economic growth by contributing about 22% of total tax collection and 29% of GNP. OICCI represents investors from 33 countries that have presence in 14 sectors of Pakistan economy.

Nearly all OICCI members who participated in survey intend to continue operating in Pakistan and two-third indicated intention to expand operations. Over 45% of respondents plan to invest more in next 4-5 years as compared to corresponding past period and 59% plan to increase their headcounts. Positive business plans show expectation of some economic stability and a modest improvement in Pakistan’s economic growth parameters.

Total investments indicated by the respondents amount to approx. $3 billion over next 2-5 years, which though an improvement over the past, is well below potential and opportunities in the country. In terms of business prospects, over 80% respondents perceive increase in sales and 66% expect their profits to go up which is expected to increase contribution to national exchequer, provide better employment opportunities and have overall positive impact in both economy and society, survey said.

OICCI members were positive on repatriation of profits, access to local finance & efficient corporate governance. However, feedback was quite critical of several areas like getting tax refunds, clarity, fairness of laws, regulations, protection of trade marks and Intellectual Property Rights.

A large number of OICCI members perceive government policies favourably but 79% were critical of policy implementation. This is improvement over 2009 survey, when over 86% respondents were dissatisfied with policy implementation. Foreign investors are highly critical of concerned authorities as 82% respondents believe government is aware of issues facing investors but 91% say it is not serious in resolving them.

Devolution of various matters previously held by Federal government, to Provinces under 18th Amendment is seen to have “no significant impact” by most respondents, apart from pharmaceutical companies who indicated they were worse off. The levy of Sindh Sales Tax Act on services and Sindh Development & Maintenance of Infrastructure SDMI on imports continues to be a big issue for businesses based in Sindh as it contributes to increased cost of doing business. A similar tax does not exist in other provinces.

OICCI President hoped that through important and unbiased feedback presented in survey, responsible authorities will take it upon themselves to systematically address weak areas identified and help put the country back at a high level of economic growth and development.

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