Business Confidence Index (BCI) survey wave 9 conducted by Overseas Investors Chamber of Commerce and Industry (OICCI) has shown seven per cent decline from 12 per cent in manufacturing sector since March 2014. The OICCI has unveiled the results of its countrywide BCI survey wave 9 conducted across country during September, 2014. This decline was partially offset by an uptick in the BCI of the services sector which improved from negative 3 per cent to positive 7 per cent in the current survey.
At 1 per cent positive, overall BCI score remained unchanged as compared to wave 8 results announced in March 2014. Though business confidence cumulatively showed a positive trend in the last six months, overall confidence level of the OICCI members, representing foreign investors, revealed a decline mark from 31 per cent in March to 16 per cent in the latest survey.
Going forward, the business confidence for the next six months remains largely negative except for the services sector that expects a better business environment, the survey suggested. While 54 per cent of the businesses expect their operations to remain static over next six months, only 30 per cent expect an increase. This is similar to the expectations in the March survey.
Commenting on the survey results, President, OICCI Asad S Jafar, said it was encouraging to note a positive sentiment across the business community despite political uncertainty. He, however, said this positivity teetered on the border line, posing a serious challenge to federal and provincial authorities to focus on good governance and create an enabling business environment. This coupled with the dismal level of the current first quarter Foreign Direct Investment (FDI), as reported recently by the State Bank of Pakistan, should be a key concern for the government.
Jafar also expressed a concern at the major drop in the confidence level of the OICCI members and said the organisation would continue to work closely with authorities to resolve bottlenecks encumbering investment. He said that this poor level of interest in investment together with a dismal level of the first quarter FDI is unhealthy for an economy like Pakistan which has the capability and potential to grow at a much faster rate given the right environment and timely support.
Conducted through field interviews in all four provincial capitals, Islamabad and key business towns across the country, the survey covers feedback from representatives of all business segments in Pakistan, covering roughly 80 per cent Gross Domestic Product. The survey is based on feedback from manufacturing (46 per cent), services (29 per cent) and the retail and wholesale trade (25 per cent) sectors.
Another major focus of the current wave 9 was to gauge the investment appetite of the respondents. It was observed that the economy is still in an expansionary mode but with a downward trend. Against 38 per cent in the previous survey only 30 per cent respondent expect the business to expand in the next six months. Only 24 per cent of the respondents in the current survey have plans to make capital investment while the remaining 76 per cent have no plans for expansion. Energy shortage, security concerns, inconsistent government policies and high cost of financing were highlighted as major concerns behind non-expansion. Similarly, only 30 per cent (41% in wave 8) expect growth in sales and only 27 per cent expect growth in profitability vs 30 per cent in the last such survey.
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