The latest survey on Business Confidence Index (BCI) conducted by the Overseas Investors Chamber of Commerce and Industry (OICCI) during September-October, 2016 period is not animating. According to its findings, business confidence had dipped by as much as 19 percentage points to only 17 percent compared to the score of 36 percent in the last survey released in April, 2016. The respondents identified concern on energy, increase in prices, security, law and order, government policies, regulations, decline in exports, negative impact of new tax laws and volatile political environment as some of the key issues. The decline in the BCI in the survey was shared by all the sectors. Manufacturing sector went down by 12 percent, retail sector by 21 percent while services sector showed a massive decline of 28 percent. Sector-wise results showed that automobile (42 percent), financial services (37 percent), food and chemicals (25 percent each), transport and communication (23 percent), petroleum (22 percent), non-metallic (20 percent) and wholesale (17 percent) were the flourishing sectors. On the other hand, tobacco (-22 percent), real estate (-8 percent) and textiles (-8 percent) were the conservative sectors of the economy. Cities with positive outlook were Karachi (18 percent), Lahore (29 percent), Rawalpindi/Islamabad (22 percent), while Quetta (-14 percent), Faisalabad (-1 percent), Multan (-4 percent) and Peshawar (-8 percent) recorded a downward confidence level. The sentiments of leading foreign investors, represented by the OICCI members, posted a decline of 9 percent in their confidence level from 55 percent to 46 percent in the latest survey. Commenting on the results of the survey, OICCI President, Shahab Rizvi, remarked that the latest survey should be taken as a key watch-out for the government and quick, decisive and visible action was needed by the government in some areas to arrest a potential decline in future surveys.
We believe that OICCI has played a very useful role in the economy of Pakistan over the years. It has not only been instrumental in bringing investment to the country to bridge the saving-investment gap but also has made concerted efforts to introduce modern technology of production and innovation to enhance productivity and exports of the economy. While these are traditional roles of foreign investors in any country, OICCI in Pakistan has generally assumed another responsibility of informing the policymakers of the country about the policy pitfalls hampering the flow of foreign investment and weakening the resolve of foreign investors to chose Pakistan as a destination of investment. The compilation of BCI on a periodic basis of course is a commendable effort to enable the policymakers to know the latest investment issues and take timely measures to redress these issues. A look at the latest survey would reveal that the OICCI is not conjuring problems to win favours from the government but is sincerely trying to help the authorities to attract more foreign investment and accelerate the process of growth. Seen realistically, the results of the survey are as good as irrefutable. It is a fact that the business confidence in the country had vastly improved compared to a couple of years ago but has nosedived over the last six months or so due to negative developments like a protracted tussle between the PML (N) and PTI and a deepening confrontation at the borders. There have also been real or perceived concerns about inconsistency of policies, security management and energy despite the claims of the government to meet the supply shortfalls to a great extent. The classification of cities and sectors also reflects the hard work and objectivity in categorising various areas and sectors according to the prevailing situation. One major factor contributing to the authenticity of the survey was that it was conducted through comprehensive interviews in all the four provincial capitals, Islamabad and key business towns across the country and was based on feedback from representatives of all business segments including retail covering roughly 80 percent of the GDP.
While efforts should be made to boost the BCI, at least to the levels witnessed about six months ago, as soon as possible, it is heartening to note that the business confidence for the next 6 months is expected to be positive and entrepreneurs were hopeful about increased economic activity and a higher level of employment. Respondents were generally optimistic about an increase in demand due to expected economic growth and ongoing major infrastructure projects related to the CPEC. Hopefully, such sentiments will be transmitted to foreign investors looking to deploy their funds in various parts of the world. The existing members of the OICCI could act as good ambassadors to help the country in this regard.