OICCI's business confidence survey

The Overseas Investors Chamber of Commerce and Industry (OICCI) has claimed that the results of its Business Confidence Index (BCI) Survey - Wave 16 - show that the overall Business Confidence in Pakistan stands at 14 percent positive, a significant decline from a 21 percent positive recorded in the Wave 15 results announced in November, 2017. The trade body also claims that the survey results were largely influenced by the pessimism in the retail and wholesale trade sector which recorded a sharp decline in Business Confidence to a positive 6 percent compared to a positive 40 percent in Wave 15. The confidence of the manufacturing sector was stable at 15 percent positive, while the services sector was bullish at 23 percent positive as compared to 15 percent in the previous Wave 15 survey.
OICCI BCI survey, conducted every six months, is said to be gaining credibility across the entire gamut of economic activities in the country for quite some time as it has been found to be a comprehensive review of both local and global business aspects. It is also considered to be largely indicative of the direction in which the economy is moving based on the perceptions of key stakeholders of the business community across the country. However, its claim that the Survey represents about 80 percent of the GDP is bereft of any evidence given the fact that the real size of country's economy remains enigmatic mainly because of the fact that research, however genuine, still continues to struggle to fathom out the size of the informal economy in the country.
Although some of the facts cited by the survey are strictly exogenous to the country's economy, the growing "pessimism" about the future due to the July 2018 general election-related political uncertainty does constitute a real cause of concern for the business community and the prospective investors, particularly foreign, as the country seems to be in the grip of uncertainty caused by an overt tussle between PML-N supremo and country's institutions following his exit from the prime minister's house after the Supreme Court judgement in the Panama Papers case. There is, therefore, little or no hope of betterment in the situation because his trial is ongoing in an accountability court on almost day-to-day basis.
Be that as it may, the OICCI President, Bruno Olierhoek, seems to have successfully proved that he has deep insight into what is actually ailing the country's economy. According to him, "[T]he significant decline in Business Confidence is not surprising considering that the country has had many challenges during the past six months like balance of payment crisis, political uncertainty and related media hype on non-economic issues, decline in FX reserves and significant weakening of exchange rate and Pakistan's inclusion in FATF grey list together with regular concerns on Pakistan economy reported by local and international media. OICCI members believe that this situation should be taken as a wake-up call by the higher authorities and leaders by proactively engaging with key stakeholders of the economy like OICCI, and resolving current concerns of the investors, including on matters of taxation, mounting tax refunds and circular debt, and harmonization of policies across different federal and provincial jurisdictions supported by visible improvement in good governance and a policy framework which is progressive, transparent, consistent and predictable."
No doubt the Survey's findings deserve attention of our policymakers and others even during a very brief tenure of the upcoming caretaker government. However, its finding that despite an increase in the BCS for Lahore and Rawalpindi, the overall score for Metros declined by 8% due to a drastic decrease of 18% in the score of Karachi, lacks convincing evidence because the economic hub of the country has been witnessing unprecedentedly improved law and order in nearly four decades that has manifested, among other things, by the absence of violent protest strikes that used to bring economic activities of the entire city of over 20 million to a standstill, and a recent spurt in civic infrastructure development, however modest, in recent weeks and months. The question, therefore, that begs a clear and cogent answer is whether or not Karachi has scored so low in the business confidence index mainly due to deepening political uncertainty that has been caused by unraveling of Muttahida Qaumi Movement, a party that had been dominating urban Sindh, particularly Karachi, for nearly four decades.