Overseas Investors Chamber of Commerce and Industry, (OICCI) has expressed its concern over the diminishing foreign direct investment despite the improved business environment and better law and order situation in Pakistan. Though, the security situation has improved and energy supply to the industry also got better in the country, the foreign direct investment continues to be at a dismally low level and does not at all commensurate with the solid potential of the country, said OICCI President Shahab Rizvi while talking to a selected group of media people here in the provincial metropolis.
The managing committee members including Bruno Olierhoek, Managing Director Nestle Pakistan Limited, Kimihide Ando, Senior Vice President and Chief Executive for Pakistan, Mitsubishi Corporation, Marek Minkiewicz Managing Director Metro and OICCI Secretary General Abdul Aleem also spoke on the occasion.
Showing their surprise, the OICCI members said that considering Pakistan's many positives like the improving level of GDP growth, various incentives offered to local and foreign investors, a very large middle class of roughly 70 million, record low level of inflation and interest rates, improving foreign exchange reserves and slowdown in competing commodity based economies, which are facing difficult time, what is holding back inflow of large investment in the country is not understandable.
Shahab Rizvi said that one of the key bottlenecks, according to OICCI members, is the lack of predictable, transparent and consistent implementation of policies which sometime deter potential new investors making large commitments in the country. At the same time, he mentioned that OICCI members who have been operating in Pakistan for many years and know the environment and potential of the country continue to invest large funds, roughly over a billion dollars annually.
The OICCI members employ over a million people and contribute about one third of the total tax revenues of the country, he said. Shahab Rizvi referred to the OICCI's recent Business Confidence Index, which at a record level of positive 22, supported by an equally bullish feedback from foreign investors operating in Pakistan in the OICCI Perception Survey released in early 2016 gives a positive indication of the improving economic environment and investment potential in Pakistan.
He urged the government to engage best experts from within and outside the country and even invite international consultants to advise on boosting longer term investment in export based industries in Pakistan, considering Pakistan's strategic location and strong base of educated working class.
He also referred the Mckinsey & Company consultant's previous report to the federal government, which had presented an in-depth analysis and recommendations for diversifying Pakistan's exports. Among other things, the report had suggested investment in pharmaceutical industry as an area of growth with tremendous export potential. However, he said that the Pharma industry, unfortunately, has been overregulated in the country and is not giving appropriate returns to its foreign investors who are also concerned about the protection of their patents, which is another detriment for potential of export from the country.
Pakistan has no FDA (federal drug authority) certified pharmaceutical plant where as India has over 160 and Bangladesh has four such plants, he added. Secretary General OICCI Abdul Aleem said that in its recent budget proposals to the Federal Board of Revenue, the OICCI has proposed that tax policies, which lead to longer term investment, should be protected for at least ten years phasing out period. The proposals highlight the need to aggressively broaden the tax base, improve the documentation of the economy and drastically reduce the size of the informal economy from current estimated level of 50 percent of the documented sector.
The OICCI urged the government to implement Tax Reform Commission recommendations, reduce the tax rates and number of taxes to facilitate economic activity and investment. It has also shown concern at ineffective protection of Intellectual Property Rights comprising of patents, trademarks and copyrights. It has urged for a rapid and effective implementation of the Intellectual Property Act 2012 provisions including functioning of the IPR Tribunals.
The OICCI also highlighted the need for a structured accountability of various government departments on economic and investment issues. It suggested that a regular, at least quarterly, formal dialogue between government, including provincial governments, and the leading business chambers like the OICCI should take place to timely remove impediments to economic growth and investment.
The OICCI also expressed concern over Pakistan's rapid fall in the World Bank's Ease of Doing Business Indicators and expected that the authorities, especially the provincial governments, will take a serious view of the issues identified and help create a business and investment friendly environment in the interest of creating employment and better living standards for the people of the province/country.
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