Investors want security, energy and political stability

An overwhelming 74 percent of foreign companies operating in Pakistan are still interested in expanding their operations in the next two years, according to a recent survey report by the OICCI.
Pakistans relatively untapped potential and an attractive demographic structure make the country an attractive market for almost any business. In line with this rationale, investors on an average, consider Pakistan at least as good as other emerging markets to work in, according to the same report.
Then what explains the 37 percent decline in the quantum of planned investment by the OICCI members that dropped to Rs93.7 billion, from Rs148 billion planned in 2008.
A lack of energy infrastructure appears to be one of the biggest impediments. And, gauging from the perceptions of foreign investors currently present in Pakistan, it seems the problem will continue to persist at least in the medium term.
The ministry of water and power stands out as the most unpopular government department - something which doesn really come as a surprise. Remember the RPPs façade!
In contrast to service sector regulators, such as PTA, SBP and SECP, who received an overwhelming support for managing the industry, regulators in the energy sector were given failing grades. OGRA, WAPDA and NEPRA, combined were ill received by the overseas chamber.
Thats indeed a story most are all too familiar with. But that can be, because for most part of Pakistans recent economic history, foreign investors have confined themselves to the service industry- such as financial institutions and telecom - owing to which the trickle down spillover effect on human capital also remained confined to the same sector.
The causation, however, comes down to deteriorating law and order situation in the country, which foreign investors feel is the biggest threat looming over the business environment in Pakistan. Years after years, this has been the biggest concern and the majority of investors feel that the law and order situation has worsened compared to 2008.
This view comes somewhat contrary to that of Richard Holbrooke, Americas special envoy for the region, who recently said that Pakistans fragile economy and energy deficit, had become a larger concern than terrorism in the region.
It will be interesting to see what the key decision makers in Islamabad make of these opposing viewpoints. The message from those who contribute 22 percent to the national exchequer in the form of tax receipts is clear: fix law and order, fix energy and ensure government stability.