KARACHI: About 45 percent of 187 members of Overseas Investors Chamber of Commerce and Industry (OICCI) have invested roughly $ 1 billion in their units from their retained profits during 2011.
This was stated by president OICCI Humayun Bashir, in a statement issued here Monday while commenting on the 3rd quarter report of State Bank of Pakistan (SBP) which said that foreign direct investment has declined substantially in the country.
OICCI president said SBP report does not take into account the amount of profits retained in the country and ploughed back by the foreign companies operating in Pakistan for new investment in acquiring plant and machinery, equipment, software, warehouse facilities and other tangible and intangible investments.
Moreover, he said that the accumulated profit and free reserves are also used by these companies to partially settle the outstanding loans or for increasing their paid up capital, where needed.
"This same amount would have been counted as foreign direct investment if the investing companies/banks would have gone through the process of remitting it out of the country as dividend, after paying applicable taxes thereon, and then remitted the same amount inward into the country for new investment", he added.
Bashir noted that FDI does not accurately reflect the total level of investment by the foreign investors in the country.
He pointed out that OICCI is presently conducting a quick survey among its members to determine the level of investment made during 2010 and 2011 by these member companies out of their retained profits which otherwise would have been remitted abroad.
Based on the data currently available from about 45 % of its 187 members, such investment during 2011 was roughly one billion US dollars, he added.
President OICCI indicated that OICCI would like to work closely with SBP, BOI and Ministry of Finance to ensure that such indirect foreign investment should also be recorded in FDI statistics in appropriate manner.
Humayun Bashir was optimistic that such indirect foreign investment will get a boost as soon as the Federal Board of Revenue (FBR) issues necessary clarification on investment made under the 'tax credit for equity investment scheme' announced in the last year's budget (2011-2012) under Income Tax ordinance section 65 (d) and 65 ( e).
OICCI has already advised the FBR of the apprehensions of the potential investors due to lack of clarity in the wording of this attractive and investment friendly piece of legislation. It is expected that once necessary clarification is provided, many companies will take advantage of the incentive offered by the Government of Pakistan to enhance industrial development and employment in the country.
Drawing attention to OICCI's recent perception and investment survey 2011 and 2012 taxation proposals, President OICCI urged the government to address the security, energy and policy implementation issues on priority and maintain a purposeful regular interaction with key stakeholders like OICCI to ensure that right level of FDI is attracted to Pakistan.
The country has the capacity to absorb a much larger level of FDI than it currently receives, he observed.
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