Karachi—Overall Business Confidence Score (BCS) in Pakistan, remains positive, but the positivity has declined from 36% in April’ 2016 to only 17% in the latest survey with a drop of 19%. The Overseas Investors Chamber of Commerce and Industry ( OICCI) has announced the results of the Business Confidence Index Survey (BCI) – Wave 13 – conducted throughout the country in September/October 2016 The OICCI 2016 Survey released in November shows decline in business confidence across all segments of the trade and industry.
The respondents identified concern on energy, increase in prices, security, law and order, government policies, and regulations, decline in exports, negative impact of new tax laws and volatile political environment as some of the key issues. Commenting on the BCI results, OICCI President Shahab Rizvi said that “latest survey results, despite being significantly positive versus two years ago, represent a significant correction as compared to the previous April 16BCS of 36%.
Hence this should be taken as a key watch-out for the government. Part of this correction could be natural rebalancing of feelings with the euphoria of initial positivity cooling down. However, another part of this correction is driven by perceived and real concerns on taxation, inconsistency of policies, and management of security and energy issues. We believe that quick, decisive, and visible action from the government in these areas is needed to arrest potential decline in future surveys”.
The decline has been observed in Overall Business Confidence among all sectors in November’16 survey. Manufacturing sector went down by 12%, Retail sector by 21% while Services sector went down by a massive 28%. The sentiments of the leading foreign investors, represented by the OICCI members, who were part of the survey, followed the drift and posted a lessening of 9 percent confidence to come down from 55 percent to 46 percent in the Wave 13 results. Sectorial Business Confidence reflect that Automobile (42%), Financial services (37%), Food (25%), and Chemical (25%) as the most flourishing sectors followed by Transport & Communication (23%), Petroleum (22%), Non-Metallic (20%), and Retail and Wholesale (17%) sectors. However, Tobacco (-22%), Real Estate (8%) and Textile (8%) came out as the most conservative sectors in the latest survey. Cities with positive outlook were Karachi (18%), Lahore (29%), Rawalpindi/Islamabad (22%), and Sialkot (12%), while Quetta (-14%), Faisalabad (1%), Multan (4%) and Peshawar (8%) have recorded a downward confidence level.
Going forward, the business confidence for the next six months is positive but considerably less bullish than the previous April 16 survey. Businesses are expecting to increase their employment in the next six months, but somewhat in lesser proportion compared to the last six months. Many of the survey respondents were optimistic in terms of increasing demand due to expected economic growth and ongoing major infrastructure and CPEC projects.
There was also some optimism for next six months expecting increase in sales, profits and ROI with 35% indicating expansion in their businesses. “The BCI survey provides a very solid incentive to the authorities“, commented Shahab Rizvi, “to keep focus on improving security and energy situation besides streamlining governance on commercial matters, increased interaction with the business community to drive a collaboration mind-set to improve the overall perception and remove any communication gaps, improve on Ease of Doing Business parameters, and above all ensure sustainability and avoid surprises on policy matters.
OICCI members believe that there is a great opportunity for Pakistan to attract investment and realize its true economic potential” Conducted through field interviews in all four provincial capitals, Islamabad and key business towns across the country, the survey is based on feedback from representatives of all business segments in Pakistan, including retail, and covers roughly 80 percent Gross Domestic Product.