OICCI Investor Survey: A tale of governments apathy

The Overseas Investors Chamber of Commerce and Industry has recently released the findings of its Perception and Investment Survey 2011. The survey which represents the collective voice of foreign investors in the country reiterates what many already know: that the law-and-order situation in the country and the energy deficit continue to be the biggest challenges facing the economy. Some other insights provided by the survey stand against the established rhetoric. First, while many local businesses have been clamoring for sharp cuts in the monetary policy rate, this survey shows foreign investors are more concerned about prospects of inflation, compared to 2009. Similarly, forty-one percent of foreign investors currently operating in Pakistan intend to invest more in the country over the next 2-3 years, as compared to the past 2-3 years. This proportion jumps to 59 percent when the period under consideration is extended to 4-5 years. "While this means that respondents firms will invest about $3 billion in the country over the next 4-5 years, we must contextualise this amount by highlighting that this tally is relatively low and improving the investment climate in the country can yield much greater inflows", remarked OICCI vice-president Humayun Bashir. When pitched against other countries in the region, Pakistan is preferred in terms of ease of doing business by about 47 percent respondents compared to Bangladesh, 42 percent compared to Sri Lanka and 36 percent compared to India. In addition to this, foreign investors generally appear satisfied with policies in the country. However, the implementation of policies appears to be a huge cause of concern for investors. Seventy-five percent respondents deemed implementation to be a major obstacle to business growth in 2011, down from 86 percent in 2009. Despite the fall in this proportion, it is still disturbingly high. Even more alarming are the responses to questions regarding governments awareness and willingness to address the concerns of businesses. Eighty-two percent of the respondents believe the government is aware of issues facing businesses and investors, yet 91 percent assert that the government is not serious about resolving these issues. Delving into the performance of various regulatory bodies, the respondents were largely satisfied with the State Bank of Pakistan and Securities and Exchange Commission of Pakistan. On the other hand, the Board of Investment which had featured as the darling of foreign investors in 2009 appears to have lost some luster in 2011. Not much love appears lost between OICCI members and various federal ministries. The finance ministry led the pack with 30 percent of the respondents terming its performance as supportive. By comparison, only eight percent of the respondents perceive the ministries of interior and ports and shipping to be supportive of business. Similarly, only 7 percent appeared happy with the state of affairs at the ministry of water and power. The OICCI is not the most raucous chamber of commerce and industry in the country by a long shot. But, considering the fact that its members contribute about 23 percent of the countrys tax revenues and 29 percent of the gross national product; their perceptions of the investment climate in the country serve as a barometer of the overall economic environment and its prospects. As such the most attention-worthy finding of the survey is the utter lack of interest among key government officials and their departments towards the concerns of investors from 33 different industries. Unfortunately, with the coalition government and other political stakeholders already riling up in the election frenzy, it appears unlikely that foreign investors or businesses in general will receive the attention they so direly need from the government.