The Overseas Investors Chambers of Commerce & Industry (OICCI) has rolled out key findings of its recently released 'Perception and Investment Survey - 2019'. The following are key punch lines of its survey:
- An overwhelming 75% of the respondents recommend new FDI influx in Pakistan to their parent companies.
- Foreign investors' perception of the PTI government is better than what it was in the 2017 survey.
- The incumbent government is more engaged with stakeholders on policy issues and the government functionaries have better understanding and are more committed and capable to resolve investors' issues.
- Only 10% of the investors are fully satisfied with GOP policies and 6% are satisfied with policy implementation.
- The governments of Punjab and Sindh are perceived as less investor friendly than was the case at the time of the last survey in 2017.
- Contract enforcement is a serious issue with 68 percent respondents stating that as per their experience it sometimes takes over 5 years for resolution of commercial disputes.
The survey has described the following as key impediments to FDI in the country:
- Focused international projection to dilute negative perception of the country.
- Predictability, transparency and consistency of policy and its implementation.
- Resolution of energy sector circular debt.
- Lingering issues of tax refunds.
- Federal and provincial legislations to make ease of doing business workable and acceptable to businesses.
- Simplification of the tax regime.
- Rationalization of number of regulators and regulations.
- A viable and workable regime for the protection of IPR.
- Functional SEZs and resolution of pharma pricing.
In spite of growing optimism of the OICCI member companies the FDI to Pakistan has not come back to the level of 2007 when it peaked to $ 8 billion with a GDP growth of over 7 percent, placing the country among three fastest growing economies of the region - Pakistan, India and Vietnam.
During the last decade Pakistan lost its way as a consequence of political uncertainty and poor state governance. FDI is currently restricted to less than 1% of GDP as compared to the regional norm of 3-6 percent.
Things appear to be shaping up better now with the government at least looking at FDI and the state of economy with a more serious and focused approach with the Prime Minister himself spearheading most of the initiatives.
Some serious impediments to FDI have been highlighted by foreign investors which merit government's attention if the nation wants to bring back FDI to the country.
Implementation has always been the major issue in Pakistan. Brilliant ideas and policies are rolled out, but when it comes to implementation things move very slowly.
The country may have improved its global ratings on 'Ease of Doing business' but very little of it is experienced on ground. Progress in relation to Special Economic Zones (SZEs), for example, is sluggish.
Circular debt is systematically escalating from Rs 300 billion in 2009 to Rs 1.3 trillion in 2020 with no signs of respite. Circular debt is not a financial issue; it is, in fact, a governance issue. It is a major impediment to the investment in the power sector.
The conflicting and to an extent superfluous roles and functions of multiple regulators needs to revisited. Every regulator should be a body to truly facilitate and guide the investors in accordance with country's rules and regulations rather than a body to issue multiple NOCs, many of which are superfluous, if not meaningless.
The OICCI is the collective voice of all major foreign investors in Pakistan. There are nearly 200 OICCI members from 35 different countries and 50 of them are associates of the 2019 Global Fortune 500 companies. They have a presence in 14 sectors of the economy and have assets of over $102 billion.
The member companies account for one-third of government's tax revenue, provide employment to over a million people and are important contributors to export earning. The OICCI member companies have invested $13 billion in the past seven years. OICCI is an independent and transparent voice of foreign investors in Pakistan. Its recommendations are of immense value. The government is therefore required to positively respond to its recommendations as early as possible.
(The writer is former President of Overseas Investors Chambers of Commerce and Industry)
The writer is a former President, Overseas Investors Chamber of Commerce and Industry
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