Pakistan back in business

The overall Business Confidence Score (BCS) in Pakistan now stands at a positive score of 9 percent according to the Business Confidence Index Survey in 2021. This is a record improvement of 59 percent from the previous negative 50 percent score in Wave 19 Survey conducted in May 2020”. Both these surveys were conducted by the Overseas Investors Chamber of Commerce and Industry (OICCI). The positive trend is largely driven by an increase in manufacturing (65 percent), Services (65 percent) and retail sector (44 percent).

From economic stakeholders point of view represents 80 percent of the GDP of the country with the remaining 20 percent being engaged in agriculture. The survey represents 40 percent respondents from manufacturing sector, 35 percent from the services sector and 25 percent from the retailers.

The key driving factors for the positivity are stated to be the country’s business situation (+21 percent), Industry sentiment (+20 percent), sales volume increase (+20 percent), Profit increase (+22 percent) and return on investment (+19 %). By any international standards this is an impressive performance specially when most of the world’s economies are still struggling against the Covid-19 onslaughts.

Real estate segment is also a big chunk of our economy although most of it is still part of grey economy. It remains outside the scope of OICCI. The segment has not been able to whet appetite of foreign investors although Emaar from Dubai and Meinhardt from Singapore have some footprint in Karachi. With the recent changes in the legal framework in favour of the real estate sector, tax incentives and loan availability, the segment has a potential to attract FDI. Hence the need for looking a bit deeper into the segment.

This positivity in all of the stated segments of a country’s economy is indicative of a comeback of positive consumer sentiment, which is an encouraging trend for the nation’s economy. On the other hand, the inflow of fresh FDI remains embarrassingly low and perhaps the lowest in the region. Positive results and positive outlook of over 200 existing foreign investors and improvement in key macro-economic indicators have not brought about any improvement in FDI. In the last three years, Board of Investment (BoI) experienced four Chairmen - the last one being Atif Bukhari who enjoyed a flawless track record of successfully leading some key financial institutions in Pakistan and Overseas. Apparently, there was nothing wrong with the Chairmen but with BoI and the system. By all standards, BoI over the years has turned into an obsolete organisation - if not entirely a redundant organisation. Its mindset, bureaucracy and systems are outdated and least comparable to similar entities and systems in emerging markets with whom Pakistan has to compete to attract FDI.

It is a herculean task to set the BOI right and turn it around from being an FDI repellent to an FDI facilitator. But someone has to pick up the challenge if FDI is to be channelled into Pakistan.

OICCI is the collective voice of over 200 major foreign investors in Pakistan from 35 countries having their presence in 14 sectors of the economy and contributing over a one-third of the country’s total tax revenue. It represents a major chunk of the nation’s economy and its voice is meaningful. The said survey has been conducted by an internationally known pollster for OICCI and can by all standards be described as realistic and something creditable for the incumbent government to build upon and diligently pursue well beyond Prime Minister Imran Khan’s tweet, “More good news on econ front. OICCI’s BCI Survey shows Pak standing at a positive score of 9%, an improvement of 59% from -50% score of May ‘20. OICCI member’s confidence stands at +34% vs -74% in 2020, a turnaround of 108%. Dramatic rise in confidence of business especially foreign investors”.

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

Copyright Business Recorder, 2021