OICCI launches 'Perception and Investment Survey'

Foreign investors and members of Overseas Investors Chamber of Commerce and Industry have indicated positive investment plans for next few years, despite issues of security, access to energy and governance. Moreover, there are concerns related to contract enforcement, tax refunds and intellectual property implementation in the country.
This was amongst the key findings of 2011 'Perception and Investment Survey', launched Thursday by the chamber. The survey, conducted every other year, collects data from OICCI members only. President OICCI emphasised that the survey findings should be taken seriously as they represent the collective voice of the foreign investors who play a leading role in Pakistan's economic growth by contributing about 22 percent of the total tax collection and 29 percent of GNP. The chamber represents investors from 33 countries that have a presence in 14 sectors of Pakistan's economy.
Nearly all members who participated in the survey intend to continue operating in Pakistan, and two-third of the respondents, indicated an intention to expand operations. Over 45 percent of the respondents plan to invest more in the next four to five years as compared to the corresponding past period and 59 percent of respondents plan to increase their head-counts.
The positive business plans revealed an expectation of some economic stability and a modest improvement in Pakistan's economic growth parameters. Total investments indicated by the respondents' amount to approximately US $3 billion over the next two to five years, which, though an improvement over the past, is well below the potential and opportunities in the country.
In terms of business prospects, over 80 percent of respondents perceive an increase in sales and 66 percent expect their profits to go up. This is expected to increase the contribution to the national exchequer, provide better employment opportunities and have overall positive impact on both the economy and society. A sizeable percentage of respondents perceive Pakistan to be better or the same for ease of doing business as compared to eight other countries whose macro-economic indicators over the recent years have been far better than Pakistan. For example, 36 percent of respondents said that ease of doing business in Pakistan is either better or the same as in India.
When asked to rate various aspects of Doing Business in Pakistan, OICCI members were positive about the areas such as repatriation of profits, Access to local finance and efficient corporate governance. However, feedback was quite critical of several areas like getting tax refunds, clarity/fairness of laws and regulations and protection of trademarks and Intellectual Property Rights.
A large number of OICCI members perceive Government Policies favourable but 79 percent were critical of policy implementation. This is an improvement over the 2009 survey, when over 86 percent of the respondents were dissatisfied with policy implementation in the country. Foreign investors are highly critical of the concerned authorities as 82 percent of respondents believe the government is aware of the issues facing investors, but 91 percent say it is not serious about resolving them. Improved two-way trade with India was viewed favourably as a business facilitator by 60 percent of respondents. 39 percent of respondents indicated that the Revised 2011 Afghan Pakistan Transit Trade Agreement is positive provided it is implemented properly.
Devolution of various matters, previously held by federal government, to provinces under the 18th constitutional amendment is seen to have no significant impact by most respondents, apart from pharmaceutical companies who indicated they were worse off. The levy of Sindh Development and Maintenance of Infrastructure on imports continues to be a big issue for businesses based in Sindh as it contributes to the increased cost of doing business in Sindh. It may be noted that a similar tax does not exist in other provinces.
Commenting on the report, president OICCI said that foreign investors operating in Pakistan are concerned about the law and order situation, which is ranked as the biggest challenge facing the business community, closely followed by energy supply. Political instability and high inflation are other major challenges. He was hopeful that through the important and unbiased feedback presented in the 2011 Perception and Investment Survey, the responsible authorities will take it upon themselves to systematically address weak areas identified and help put the country back at a high level of economic growth and development.-PR