Despite facing obstacles and uneven policies in Pakistan, the total assets of the country’s top multinational companies have approached the Rs8-trillion mark, claimed the Overseas Investors Chamber of Commerce and Industry (OICCI).
OICCI is the prime representative body for multinationals with 195 members.
“It is simply not a viable strategy for any multinational to ignore the sixth most populous country, especially when looking to expand its operations globally,” said OICCI President Shahab Rizvi while talking to a group of journalists.
“However, multinationals need consistent policies from government, it doesn’t matter whether the investment is short or long-term,” he added.
The representatives said Pakistan has had quite a few hiccups with army-led governments and that a sustained democracy is needed for additional investors to venture into the country.
Currently, the flow of investment in Pakistan from multinationals is not significant.
“Pakistan has more or less business-friendly policies, however, their flawed implementation is a key impediment. If resolved, this would change Pakistan’s perception and bring in large chunk of foreign direct investment (FDI),” remarked Rizvi.
In the past few years, the flow of investments from MNCs has been a little over $1 billion annually. According to the OICCI, the member companies have invested $3.5 billion in Pakistan from 2012 to 2014.
Compared to India, which managed to attract $34.9 billion worth of FDI for the fiscal year 2015, Pakistan managed to receive a mere $709.3 million.
Rizvi said India has managed to axe many of the obstacles in the way of FDI. “For instance, the representatives of MNCs no longer need to knock on government offices for their issues. Additionally, India has executed a remarkable marketing campaign to attract FDI.”
OICCI Secretary General Abdul Aleem chimed with an additional suggestion, “Pakistan should also appoint one representative whom the MNCs could approach for their issues rather than having to meet different individuals.”
Pakistan has improved a lot over the years, however, it has not been able to capitalise these gains in terms of FDI, he added.
The sales tax refunds is another issue which MNCs believe sends a wrong message to global investors. “OICCI member companies pay around one-third of the total revenue or Rs900 billion in taxes and our sales tax refunds are merely Rs30 billion which is a small piece of the pie. Still it is a matter of concern,” Aleem added.More than half of the multinationals operating in Pakistan believe that the business climate in the country is better compared to other 10 regional countries including Sri Lanka, Bangladesh, Philippines and Vietnam, an Overseas Investors Chambers of Commerce and Industry (OICCI) survey result revealed.
The OICCI managing committee shared the results of the Perception and Investment Survey 2015 with Prime Minister Muhammad Nawaz Sharif on Wednesday. Finance Minister Mohammad Ishaq Dar, Commerce Minister Khurram Dastgir Khan and Board of Investment Chairman Miftah Ismail were also present in the meeting.
OICCI President Atif Bajwa said that the overall results of the survey were very encouraging and reflect improved and positive sentiment of the members of the OICCI – an association that represents over 195 multinationals operating in Pakistan.
“About 82% have stated that they foresee continuing growth in their business and that they are generally committed to making further investment in Pakistan,” he said, according to a press release.
However, Bajwa added that respondents have also highlighted their concern with some aspects of doing business in Pakistan and have indicated that more support from certain government ministries and regulatory bodies is required.
The good news from this year’s survey was that the country’s economy continues to improve. This is a welcome sign for the youth entering the job market with more than half of the respondents indicating that they will add to their employment level.
Moreover, nearly 60% of the respondents indicated plans to make new investments, out of which more than seven out of ten respondents plan to invest more or similar amounts over the next one to five years, as compared to the investments they made in the previous corresponding period.
The planned investment in business and human capital is expected to boost revenue and profitability, as 84% of the respondents are expecting increased sales and 79% expect their profits to rise.
“More than 50% of the respondents have, once again, identified security and energy shortages as the two biggest challenges they face followed by an increasing tax burden, policy implementation and lack of inter-governmental coordination,” Bajwa added.
Despite the above negative perceptions, the survey responses should be encouraging for policymakers as the High Risk rating for Pakistan as a venue for investment, has, in the opinion of the respondents, reduced to 19% from 42% in 2013.
