Overseas Investors Chamber of Commerce and Industry indicates positive investment plans for next few years

KARACHI: Foreign investors and members of the Overseas Investors Chamber of Commerce and Industry (OICCI) have indicated positive investment plans for next few years, despite issues of security, access to energy and governance.

This is amongst key findings of the 2011 Perception and Investment survey launched Thursday by OICCI. The survey, conducted every other year, has collected data from OICCI members only. There are concerns related to contract enforcement, tax refunds and intellectual property implementation in the country, the survey noted.

OICCI Secretary General M Abdul, commenting on the report, said that foreign investors operating in Pakistan are mostly concerned over the law and order situation and energy supply. Political instability and high inflation are other major challenges, he said.

According to survey, when asked to rate various aspects of doing business in Pakistan, OICCI members were positive about areas like repatriation of profits, access to local finance and efficient corporate governance. However, feedback was quite critical of several areas like getting tax refunds, clarity/fairness of laws and regulations and protection of trade marks and Intellectual Property Rights (IPR).

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

OICCI emphasized that the survey findings should be taken seriously as they represent the collective voice of the foreign investors who play a leading role in Pakistan’s economic growth. The OICCI represents investors from 33 countries that have a presence in 14 sectors of Pakistan’s economy.

Nearly all the members who participated in the survey intend to continue operating in Pakistan, and two-thirds of the respondents, indicated an intention to expand operations.

Over 45% of the respondents plan to invest more in the next 4-5 years as compared to the corresponding past period and 59% of respondents plan to increase their headcounts.

The positive business plans revealed show an expectation of some economic stability and a modest improvement in Pakistan’s economic growth parameters. Total investments indicated by the respondents’ amount to approximately $3 billion over the next 2-5 years, which, though an improvement over the past, is well below the potential and opportunities in the country.

In terms of business prospects, over 80% of respondents perceive an increase in sales and 66% expect their profits to go up. This is expected to increase the contribution to the national exchequer, provide better employment opportunities and have overall positive impact on both the economy and society.

A sizeable percentage of respondents perceive Pakistan to be better or the same for ease of doing business compared to eight other countries whose macro-economic indicators over the recent years have been far better than Pakistan. For example, 36% of respondents said that ease of doing business in Pakistan is either better or the same as in India.

Improved two-way trade with India was viewed favourably as a business facilitator by 60% of respondents. 39pc of respondents indicated that the revised 2011 Afghan Pakistan Transit Trade Agreement is positive provided it is implemented properly.

Devolution of various matters, previously held by the federal government, to the provinces under the 18th Amendment is seen to have no significant impact by most respondents, apart from pharmaceutical companies who indicated they were worse off.

Survey said the levy of the Sindh Development and Maintenance of Infrastructure (SDMI) on imports continues to be a big issue for businesses based in Sindh as it contributes to the increased cost of doing business in Sindh. It may be noted that a similar tax does not exist in other provinces.

Secretary General OICCI was hopeful that through the important and unbiased feedback presented in the 2011 Perception and Investment survey, the 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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