OBSERVER REPORT KARACHI Overseas Investors Chamber of Commerce and Industry (OICCI) has conducted bi-annual survey 2019 which revealed around 75 percent of its members show willingness to recommend new foreign direct investment in Pakistan to their parent companies. The OICCI announced the results of the biannual “Perception and Investment Survey 2019” conducted during last quarter of 2019 amongst the leading foreign investors of the country, who are members of OICCI. The survey results present an array of insights, shedding light on both the concerns on the current business environment, as well as the confidence of OICCI members on the growth potential of the country. OICCI President Shazad Dada highlighted: “The survey shows that on a number of business climate parameters foreign investors remain positive, and are upbeat on the performance of their respective business entities in Pakistan, with 75 percent of the respondents indicating willingness to recommend new FDI in Pakistan to their parent companies.” He further added: “whilst foreign investors participating in the survey have shown concerns with some areas of doing business, the case for business growth potential and opportunities in Pakistan is supported by over 7 out of 10 survey respondents indicating their plans to invest more or similar amounts over the next 1 to 5 years, as compared to the previous corresponding period. “This view may appear conservative since in the past two years OICCI members have reinvested US$ 2.5-3 billion annually in new capital expenditure.” OICCI members have indicated that compared to the previous 2017 survey, the federal government is better engaged with stakeholders on Policy issues and its senior functionaries appear to have better understanding, and commitment to resolve investors issues. A number of economic disciplinary measures announced by the Government last year, like the partial withdrawal of incentives on new investments, also affected OICCI members. The strong resistance, especially from a large segment of the market players in the informal economy, towards many bold measures to document the economy has had negative impact on the business operation of many of OICCI members. Delayed action on some other key concerns, like interprovincial coordination issues, matters relating the renewal of Cellular Mobile Operators licenses, extended time in processing corporate remittances, and capacity issues in some of the regulatory bodies have been raised as concerns for many businesses. Furthermore, nearly 30 percent devaluation of the Pak Rupee, increase in the central bank’s discount rate from 6.5 percent in July 2018 to 13.25 percent in Q3 2019, led to an increase in the cost of doing business. Two key issues of concern to foreign investors, the overdue tax refunds, around Rs. 80 Billion, and the energy sector ’s Circular debt remained largely unresolved. This challenging business environment is duly reflected in the feedback as the foreign investor’s perspective of doing business has seen a major decline in the 2019 survey as compared to the last 2017 survey. More than 70 per cent of the Foreign investors/OICCI members are partially satisfied with “Policy framework” relating to business but have concerns on the implementation of policies. More than half of the respondents are concerned on the consistency and predictability of monetary and fiscal policies
