Asking the head of a chamber of commerce about economic prospects is like asking a barber if you need a haircut. You already know their answer.

The economy may be going down the toilet, but optimism is never in short supply for chamber leaders. Punctuated with customary references to the country’s ‘potential,’ their words are often drawn in two directions at once. They air the grievances of their members but only with kid gloves so as not to bruise the egos of workaday politicians in powerful positions.

In a recent conversation with Dawn, newly elected president of the Overseas Investors Chamber of Commerce and Industry (OICCI), Haroon Rashid, spoke about his vision for the country’s largest investment chamber with 200-plus members from 35 countries. Mr Rashid is managing director of Shell Pakistan. OICCI Secretary General M Abdul Aleem accompanied him during the interview.

The focus of discussion was the expected investment by multinational companies (MNCs) already operating in Pakistan as well as foreign direct investment (FDI) from new overseas investors. Newspaper headlines recently screamed that FDI rose 88 per cent to $2.5 billion in 2019-20. But a closer look at the data reveals the year-on-year jump was mostly a reflection of the low-base effect. The fiscal year preceding 2019-20 was particularly bad with net FDI of only $1.3bn.

The forecast by OICCI about future inflows sounds too good to be true. Global investors are holding back funds amidst Covid-19. No one knows what direction the economy will take once the government resumes fiscal caution following the pittance of relief it wrestled away from the International Monetary Fund to fight the pandemic.

OICCI President Haroon Rashid vows to bring Apple, IBM and Microsoft to Pakistan

Following are the edited excerpts from the interview.

How much foreign investment do you think Pakistan is expected to receive in the next three years?

HR: The investment outlook of OICCI member companies is quite healthy. We expect them to invest on average $3bn a year for the next three years. Separately, we expect FDI to be $10bn in the next three years. All in all, FDI plus investment from existing MNCs will likely remain around $6bn-7bn a year in the medium term.

Which sectors of the economy are likely to get foreign investment?

HR: Corporate farming and agro-based businesses, IT and digitisation, food and consumer goods, energy, pharmaceuticals and infrastructure development are some of the sectors likely to get FDI.

Why does OICCI have so few Chinese investors although investment from Beijing has formed the bulk of FDI in recent years?

MAA:We have added four Chinese members, including Industrial and Commercial Bank of China, since 2015. There are about a dozen big Chinese companies working in Pakistan. Our membership criteria are that the parent firm must operate in at least two other countries and its share capital should not be less than half a million dollars. Most of the Chinese-origin firms here are government companies. They don’t always qualify for our membership. One Chinese company that does qualify but isn’t our member is Zong. Maybe that’s because our members include its rivals. I don’t know the exact reason. The Chinese embassy is keen to make all such companies our members.

Why are Pakistani companies like Engro Corp, Hub Power, Habib Metro Bank and Pakistan Petroleum members of OICCI?

MAA: Once a company meets our criteria and becomes our member, we don’t delist them if their ownership changes afterwards. These companies were foreign-owned when they joined OICCI.

MNCs are blamed for the country’s recurring balance-of-payments crises. They repatriate foreign exchange every year without generating any dollar-based export earnings. Repat­riations totalled $1.2bn in 2019-20.

HR: Businesses exist to make profit. International companies bring their skill sets, technology, corporate governance standards and honesty in paying taxes and employing people. Countries in which MNCs set up re-export plants happen to be in top 20-30 on the ease of doing business index.

MAA: One, making profit is not a bad thing. Two, countries need to ensure continuity of policies to attract that level of foreign investment. For example, the government prematurely withdrew in 2019 the 10 per cent tax relief on establishing a new factory although the incentive was to expire in 2021. Unilever spends around $100 million every other year to set up a new factory. Nestle commissions a new plant every year. They do it without fanfare because of the jealousy factor. People resent that MNCs are making money.

What will be your singular focus in the year ahead as you lead OICCI in 2020-21?

HR: Technology is a very important area. Global tech companies like Tesla, Apple, IBM and Microsoft have limited presence in Pakistan. With the help of the government, OICCI will try to change this. We will try to bring these companies to Pakistan. Technology is our future.

MNCs and foreign investors have an image problem among not only the general public but also senior government officials. For example, independent power producers (IPPs) were recently forced to renegotiate their long-term contracts that government officials termed exploitative. Your thoughts?

HR: I won’t comment on the issue of IPPs. But yes, there has been vilification of international investors of late. We need to be careful about it. Foreign companies in the pharmaceutical and oil and gas sectors are victims of this trend. I can tell you confidently there is no such intent at the top level of the government. I never felt while meeting senior government officials that there was a deliberate intent to vilify MNCs. At the junior level, however, there are people who don’t understand what these companies bring to Pakistan. Things take an ugly turn when FIA and NAB get involved. That does not help Pakistan.

Are you satisfied by the manner the PTI government has responded to the concerns of foreign investors in the last two years?

MAA: Approachability or ease of access has improved under this government. Still sometimes it feels like we are going one step forward and two steps backward. Our members collectively pay Rs5m per day in taxes, yet the issue of refunds refuses to go away. Similarly, progress on the issue of digitisation is very slow. We prepared a comprehensive report on the matter and presented it to the prime minister soon after he took office. He accepted the report, but there has been no follow-up by the IT minister, secretary or the myriad of committees set up in this regard.

Published in Dawn, The Business and Finance Weekly, September 1st, 2020