OICCI's legitimate concerns

According to the "Perception and Investment Survey 2019" conducted by the Overseas Investors Chamber of Commerce and Industry (OICCI) during the last quarter of 2019, the leading foreign investors of the country had shown concerns on some areas of doing business in Pakistan, including withdrawal of incentives for overseas investors. These included a strong resistance of the market players towards many bold measures to document the economy which had a negative impact on the business operations of many of OICCI members. Delayed action on some other key concerns like inter-provincial coordination issues, matters relating to the renewal of Cellular Mobile Operators' licences, extended time in processing corporate remittances and capacity issues in some of the regulatory bodies were also negative factors for many businesses. Nearly 30 percent devaluation of Pak rupee, increase in policy rate from 6.5 percent to 13.25 percent, overdue tax refunds of around Rs 80 billion and energy sector's circular debt were also issues that remained largely unresolved and increased the cost of doing business. A number of companies belonging to FMCG, Food and Healthcare identified counterfeiting, illegal imports and dumping of cheap imported products as major risks to their businesses. Foreign investors also expressed concerns on lengthy timelines in contract enforcement with over two-third respondents claiming that it takes around five years in resolving commercial disputes.

The survey also indicated certain positive signs. Foreign investors were largely upbeat on the performance of their respective business entities in Pakistan, with 75 percent amongst the leading foreign investors indicating willingness to recommend new FDI in Pakistan to their parent companies. Besides, the case for business growth potential and opportunities in the country was supported by over 7 out of 10 Survey respondents, indicating their plans to invest more or similar amounts in the next one to five years. Investors also indicated that the federal government was better engaged with stakeholders on policy issues and its senior functionaries appear to have better understanding and commitment to resolve investor issues. A noteworthy feedback from the 2019 Survey was the deletion of security as one of the top five challenges.

We feel that periodic surveys by the OICCI on the investors' sentiment, in particular their concerns and impediments to their businesses, should not be taken lightly but given serious consideration with a view to resolving their concerns as far as possible, promoting the investment climate within the country and attracting more investors. This is important because domestic savings in the economy are highly insufficient to exploit the investment requirements of the country and only foreign investment could help bridge the wide gap between the two. The positive aspect about the analysis presented by OICCI is that it is usually quite balanced and does not concentrate only on the negative aspects of investment in the country. For instance, the withdrawal of incentives for overseas investors must have sent a wrong message to potential investors as the decision to invest in Pakistan in the previous years must have been based on the incentives offered to them at that time. Similarly, delayed actions relating to the cellular mobile operators' licences, extended time in processing remittances, overdue tax refunds of a large amount and capacity issues in regulatory bodies must have discouraged foreign investors because these kinds of obstacles generally do not exist in most of other countries. It is, therefore, important that relevant authorities must examine the grievances of OICCI and resolve them to the maximum extent possible, especially when the PTI government seems so much dependent on foreign investment to accelerate the growth process and reduce unemployment in the country.

It goes to the credit of OICCI that it has also acknowledged positive efforts and factors to remove impediments to higher investment and provide a conducive environment to investors. It is, therefore, heartening to note that a large percentage of foreign investors are now prepared to recommend new FDI in Pakistan to their parent companies as well as to other potential investors. The deletion of security as one of major challenges is also a big achievement, especially when security was considered as a major negative factor in the previous surveys. It is also encouraging that "foreign investors are cautiously optimistic of the future growth potential and are looking forward to improved level of public-private partnership to deliver on the true economic potential of the country."