Doing business in Pakistan: Perceptions and realities

Pakistan is just not there where it merits to be in terms of mobilising foreign direct investment (FDI) in spite of the efforts put in for years by the Board of Investment (BoI), the country’s business chambers and special ambassadors appointed from time to time to attract FDI. The incumbent government has tried out four chairmen of BoI and its current charge is held by the Secretary BoI. The approach so far adapted to mobilising any meaningful FDI is just not working.

A prospective foreign investor primarily looks at two aspects while selecting a country for investment:

1) Security of investment and country risk;

2) Return on investment and profitability.

Security of investment primarily relates to country risk in terms of its political and economic stability, security of men and material and sustainability of business.

While the other aspect relates to market and business analysis which has more to do with numbers. Pakistan with a budding middle class, growing consumer market, rising purchasing power of consumers and liberal investment incentives and government policies undoubtedly presents an investor an attractive market to be in and the numbers may add up to a healthy return on investment and profitability.

The issue for Pakistan is ‘security of investment and country risks’ factor, which undermines investor’s comfort and trust in its security of investment. This has a lot to do with the country’s perception.

Pakistan’s entities and functionaries responsible to mobilise FDI in the country have primarily been harping on presenting the investors attractive numbers and abundance of opportunities, propagated through countless seminars and webinars. Unfortunately, however, they prefer to remain silent on mitigating investor’s concerns on security of his investment.

Just last week, the BoI organised an investment promotion seminar to apprise the potential foreign investors on investment policies and opportunities in Pakistan in the field of education and innovation technologies, highlighting Information Technology sector as one of the fastest-growing sectors of Pakistan’s economy, contributing around one percent to the GDP of the country at about $3.5 billion and reaching $ 7 billion in the next two to four years. The numbers sound great but numbers alone may not be convincing enough when it comes to attracting a sizable and strategic investment in the sector.

Also, this week the Embassy of Switzerland in Pakistan and the Swiss-Asian Chamber of Commerce Switzerland (SACC) conducted a webinar titled ‘Doing Business in Pakistan – Perceptions and Realities’. It was participated, among others, by the Swiss investors who already have their footprints in Pakistan and potential investors from Switzerland – primarily, the Small and Medium Enterprises. The webinar presented a much balanced investment landscape of Pakistan as a land of business opportunities for Swiss investors and also the pitfalls an investor could come across in the process. The diversity between the apprehensions of the potential investor driven by country’s perception and the reality of success experienced by the Swiss investors operating in Pakistan was apparent. The gap between reality and perception needs to be fairly worked at and narrowed down. The Swiss Business Council Pakistan and Swiss-Asian Chamber of Commerce Switzerland shall consider to work on bridging the gap between Pakistan’s perception and the reality on ground.

Pakistan needs more of similar cooperation with other countries.

Media plays an important role in shaping people’s beliefs and ideas. More specifically, media have a great influence on how investors think about foreign countries where they have no footprint. Investors looking to invest abroad certainly pay attention to what is reported in the media about a country they intend to invest in.

Pakistan has been facing the image problem for several decades, although reality on ground is quite different. Unfortunately, however, our embassies, BoI and other responsible entities have not recognised its sensitivity nor have they taken any meaningful measures to present to the foreign media, the public at large and the potential investors a better perception of Pakistan. There are many means to do so through cultural, sports, educational and social events and people to people interactions. Foreign investment is all about country perception. Those responsible to attract FDI to the country must recognise this reality and start working on it without any further loss of time.

(The writer is former President, Overseas Investors Chamber of Commerce and Industry)

Copyright Business Recorder, 2021