Q. Briefly tell us about the history, structure and members' profile of the Overseas Investors Chamber of Commerce and Industry.
AJ. The Overseas Investors Chamber of Commerce and Industry (OICCI) was established in 1860 as the Karachi Chamber of Commerce and is the oldest business chamber in Asia. It serves as a platform to promote foreign investments thereby playing a pivotal role in the growth of commerce and industry in the country.
As the oldest and largest investment Chamber, OICCI draws on a diverse membership both in terms of sector and geography with the current 189 member companies representing 33 countries and 14 different sectors of trade and industry. Many of the OICCI members are listed on the Fortune 500 list of companies and about 58 are listed on the Karachi Stock Exchange.
For over 152 years the Chamber, its member companies and a number of individuals associated with the Chamber have played a leading role not only in the development of business, trade and commerce, but also in the institutional and social development of the country. Our members have made significant contribution in creating an industrial base and employment leading to growth of the economy. The most significant contribution of the OICCI members has been in the area of developing technology and leadership skills in the country. A large number of senior corporate leaders in almost all leading corporate entities in Pakistan have been trained under the stewardship of OICCI members.
Q. What does the Chamber do?
AJ. As a facilitator to foreign investors, OICCI plays a vital role on several fronts. The Chamber acts as a catalyst to attract FDI by projecting Pakistan as an investor-friendly destination, which is an integral part of OICCI's commitment and contribution to the country. In keeping with its role as an Ambassador for Business Pakistan, the Chamber is actively engaged in hosting both foreign trade and economic delegations and foreign missions.
The Chamber is frequently called upon to assist the government in policy formulation in the financial, commercial and industrial sectors, particularly where it impacts foreign investment in Pakistan. OICCI ensures that the voice of its membership is heard in the right quarters and influences policymaking. The Chamber also identifies and addresses major bottlenecks to investment in Pakistan and helps its members navigate through difficulties arising due to anomalies in laws or policy implementation.
OICCI routinely conducts surveys to understand the current marketplace and disseminates regional best practices, business confidence index and other perception check findings to its members.
Another important role the Chamber performs is providing support to the Government of Pakistan in improving the tax to GDP ratio of the country by providing suggestions on broadening the tax base and streamlining the taxation structure. The Chamber is actively engaged in strengthening enforcement of Intellectual Property rights in Pakistan.
Q. Who runs the Chamber?
AJ. The affairs of the Chamber are overseen by a Managing Committee (MC) which is elected every year and comprises of 13 members, eight of whom are elected by all the members and four MC members are "co-opted" by the elected MC members to enable representation of as many sectors as possible. The MC also includes the Chief Executive/Secretary General who supervises the day to day affairs of the Chamber under the guidance of the MC.
Separate Sub-Committees with representation from different member companies handle the specific functional areas of importance to the Chamber.
Q. What is the contribution of OICCI members to the country's economy in terms of employment generation, contributions to the national exchequer, Gross National Product and exports?
AJ. According to the findings of a survey conducted in 2012 where 92 OICCI members participated, the total taxes paid by the respondents for the year 2011 was Rupees 395 billion, which is 20.4% of the total taxes of Rupees 1,883 billion collected by FBR for fiscal year 2011-12. If we extrapolate the responses of the 92 members to the total membership of 189, then the total taxes paid would be even more significant. The survey also highlighted that the 92 companies had total assets worth Rupees 4.4 trillion while the share capital of all the OICCI member companies was over US $10 billion. Despite difficult and challenging times, it is heartening to note that based on a recent survey, 86 members of the Chamber invested roughly US $1 billion in 2011, out of their retained earnings, when the total FDI in Pakistan for 2010-11 was only US $813 million, as reported by the State Bank of Pakistan.
The 189 OICCI members directly employ over 150,000 people while indirect employment generated by these companies may be close to a million.
Q. OICCI regularly conducts Business Confidence Surveys and Investor Confidence Surveys. What is the rationale behind these exercises and how do they help provide insights to businesses and policy makers?
OICCI's initiative to conduct Business Confidence Surveys every six months gauges the pulse of the country's economy and is valued by the government and various other stakeholders. These surveys, which are conducted through an independent and renowned pollster company across the country, cover about 80% of the economy by reaching out to a mix of manufacturing entities, service sector and retail outlets and gauge the sentiments of the business community in various areas impacting business. The findings of these surveys are shared with the policy makers to facilitate appropriate remedial policy and administrative measures for the benefit of the economy and the country.
Q. How successful has the Chamber been in getting the Government to incorporate its advice in taxation and other fiscal policies?
AJ. The Chamber has achieved reasonable success in bringing important matters to the attention of the Government. For example the Finance bill for 2012-13 included 18 out of 64 proposals submitted to the government. In addition representatives of the Chamber are part of various Government and semi Government policy boards. Key recommendations of these representatives are considered by the government and the institutions when formulating policies.
The Chamber has over the years regularly submitted an extensive and practical outline of the measures to be taken to broaden the tax base and document the economy. What is needed is the will of the Government to implement these measures which are extremely necessary to boost the tax to GDP ratio to fund the growing infrastructure, social and economic needs of the country.
Q. Tell us about the role of OICCI in communicating the concerns and demands of the country's biggest businesses to the Government, regulators and law enforcers?
AJ. The OICCI conducts its business, inter-alia, through six sub-committees, comprising of Taxation & Financial services, Trade and Industry, Energy, Intellectual Property Rights, Security and Communications & PR. These committees include experts in their respective fields from different companies, who bring forward issues, debate on possible solutions within the sub-committees and then the OICCI Secretariat presents the issues and policy change suggestions to the government. These issues are then regularly pursued at every available opportunity with the policy makers in the Government who have regular interaction with the Chamber and its members.
The findings of the Perception and Investment Survey conducted with OICCI members also give a good insight of the issues facing foreign investors in Pakistan who are serious in promoting accelerated inflow of FDI in the country. These findings are an important means of communicating to the Government the issues faced by the business community. As per the 2011 Perception survey, the OICCI members appreciated the ease of remitting profit, access to finance, protection of investment and ease of starting a business in Pakistan but were concerned on poor policy implementation in the country including ineffective protection of intellectual property rights, lack of ease in running the business and severe hardship on tax refunds and taxation matters.
Q. Pakistan's economy is currently facing historically low levels of foreign investments. According to the OICCI, what measures are needed to boost foreign inflows to the country?
AJ. Total investment has dipped to 12.5% of gross domestic product (GDP) in the fiscal year that ended in June 2012 from a peak of 22.5% in 2007, according to the Economic Survey of Pakistan. In 2007-08, the foreign direct investment stood at $5.4 billion that came down to only $812.6 million in 2011-12. Foreign investors have shied away from investing in Pakistan due to inconsistent government policies, regulatory impediments and red tape. While the deteriorating law and order situation in the country is seen as the biggest hurdle, inconsistent government policies have also been creating major obstacles for foreign investors. Despite claims of liberal investment policies, the new entrants face problems in coming to Pakistan. The government imposes different slabs of taxes and tariffs on different categories of businesses aimed at protecting sectors. According to the World Bank's 'Doing Business 2012' report, Pakistan was ranked 105 in ease of doing business, nine places below the 2011 grade. The country slipped further down the order due to difficulties in starting a business, dealing with permits, getting credit, paying taxes and delay in resolving insolvency.
In addition, regulatory impediments were also discouraging the foreign investors coming to the country. Due to delayed response from ministries and the provinces in facilitating investments, the foreign investors are reticent at investing in Pakistan despite lucrative incentives the country offers in the shape of full repatriation of profits and dividends.
Global economic recession, energy crisis and inadequate infrastructure are some other important factors, causing a decline in investment. Addressing these issues promptly can improve the overall trend of attracting FDI in the country. We believe in Business Pakistan and see considerable potential for the country to grow provided all the key stakeholders provide for a more conducive and investor-friendly environment for foreign investors. In conclusion, it is my firm belief that serious redressal of the law and order and security issues facing us can on a fast track basis result in FDI of a minimum US $5 - 6 billion within 12 - 24 months.
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