Efforts needed attract FDI to Pakistan: OICCI

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Salim Ahmed

Lahore

OICCI President Khalid Mansoor has shown his concern on FDI trend in the country and said that though the inflow of Foreign Direct Investment (FDI) to Pakistan in the fiscal year 2016-17 has increased by 4.5 percent to $2.4 billion compared to $2.3 billion in 2015-16, the FDI remains very low and not even one percent of the GDP of the country.This level of FDI is well below Pakistan’s potential and capacity, as well as FDI inflows recorded in the past.
OICCI President who is also the CEO of Hub Power expressed these view in a media meeting in Lahore today. Khalid said that Pakistan needs significantly higher FDI, at least three per cent of GDP, to generate the desired level of economic growth and employment opportunities. Some of the developing economies in Asia like Vietnam (6%) and Malaysia, Indonesia and Philippines have higher FDI to GDP ratio. Pakistan needs to leverage its business friendly policies and a number of other positive potentials, including large investment under CPEC, a fast growing consumer market for a significantly large middle class, the availability of relatively low cost skilled workforce, besides a strategic location to ensure FDI inflows on a scale similar to it’s peer countries in the Region.
OICCI CEO and Secretary General, M. Abdul Aleem presented key highlights of the Chamber’s bi-annual Business Confidence survey – wave 14, carried out in April and released in May 2017, which indicates a downward trend with Business Confidence score (BCS) of 13% vs 17% in November 2016 and 36% in April 2016.
The business confidence of OICCI members who participated in the BCI wave 14 was also down by 9% as compared to last November 2016 survey, but with a BCS of 37% in the April survey, OICCI members continue to maintain significantly more positive sentiments than the remaining respondents. Next BCI survey – wave 15 – is currently underway and the results are expected to be announced in November.
With due focus and smart strategies by the country’s political and economic leadership large investment inflow can become a reality for the economic and employment growth for the people of Pakistan.
Elaborating on the low level of FDI, M. Abdul Aleem highlighted that the country is currently not getting its due share of FDI mainly on account of few key impediments, which include: i) Negative perception over riding positive facts about Pakistan, ii) Poor rating in the World Bank “Ease of doing business” (EODB) survey (144/189), iii) Inconsistent taxation policies focused on organized sector and lately affected by adhoc actions like the one announced in the past three years including new levies like 3-4% Super Tax, iv) Insufficient interaction between government policy makers and investors causing delays in settlements of legitimate issues like tax refunds, and circular debt in the oil and power sector. We also have to proactively manage the interprovincial coordination issues after the 18th constitutional amendment which is causing concern to both local and foreign investors.
In this respect the OICCI especially pointed out the ongoing confusion, also covered in the media, between PSQCA and the Punjab Food Authority where both bodies are claiming their exclusive rights to control food standards and quality related matters.
In conclusion OICCI President reiterated the need for a more focused approach to introduce growth oriented economic policies, especially to promote manufacturing and economic activities in the country, avoiding ad-hocism and sudden announcements of new policies without taking the private sector on board , more aggressive and result oriented taxation and trade policies to boost documentation and revenue of the economy. As a collective voice of about 200 largest foreign investors in Pakistan, OICCI is always available to share international experience in facilitating FDI in the country.