Waqar Malik, President of the Overseas Investors Chambers of Commerce and Industry (OICCI), the other day revealed the disturbing findings of a Perception Survey (August-September) 2008 undertaken by OICCI: The declining rupee-dollar parity, a decline in meeting businesses' electricity requirements from 14.7 percent to 0.9 percent and the progressively worsening law and order situation, have further lowered foreign investors' perception that Pakistan is a good place to invest.
There is nothing earth shattering about these revelations and the entire country has been grappling with weak macroeconomic fundamentals, with the poor paying a relatively higher price than the rich sections of society. However, what is disturbing about the survey is the fact that the people who participated in this survey were the 175 members of the OICCI, out of which 110 responded to the survey. These persons are responsible for not only providing jobs to thousands of Pakistanis but also account for 14 percent of the country's Gross National Product, approximately 32 percent of Gross Domestic Product of the manufacturing sector as well as contributing around 33 percent to the total tax revenue of the country.
OICCI is a premier body for promoting new and existing overseas investment in Pakistan by leveraging its members' expertise for the benefit of the investor and the country. It aims to assist in fostering a conducive, open and equitable business environment in Pakistan, facilitating transfer of best global practices in Pakistan and enhancing the image of overseas investors in Pakistan and the image of Pakistan in overseas business communities.
Its members represent key areas of business activity in the country and include 13 major industrial enterprises, four in banking, 15 chemicals/pesticides/fertilisers/ paints, 19 in engineering and industrial products, 13 in finance, 17 in food, four in insurance, three in telecommunications, 30 in oil/gas and energy, 24 in pharmaceutical industries, 13 in shipping and airlines, three in tobacco, and 15 in trading and other services. In addition, the OICCI members represent nearly all the regions of the world, namely, Europe, America, China, Japan and the Middle East. Thus if the government ignores the survey findings and does not take measures on an emergency basis to calm the fears of foreign investors, then it is likely that foreign investment, considered the mainstay of turning the economy around, will become even more elusive than at present.
What is patently evident is the fact that the government's macroeconomic reform policy appears to be focused on the private sector being the engine of growth - an engine that cannot be provided too much fuel by the government when we go on the International Monetary Fund (IMF) programme. This programme requires reforms that would raise prices of utilities further without a commensurate rise in their availability as well as force the government to raise taxes as well as follow a contractionary monetary policy, already announced by the State Bank Governor. It is, therefore, all the more imperative for the government to heed the warnings of the OICCI and undertake some policy reforms to ensure that the private sector operates smoothly.
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