KARACHI: Overall business confidence in Pakistan underwent “record improvement” in recent months, according to a survey conducted by the Overseas Investors Chamber of Commerce and Industry (OICCI).

The Business Confidence Index (BCI) Survey that the OICCI conducted across the country from May to July showed the overall Business Confidence Score (BCS) stood at nine per cent, up from minus 50pc in the preceding survey held in May 2020.

Prime Minister Imran Khan took to Twitter on Monday to share the survey results with his 14.1 million followers. “More good news on econ front… Dramatic rise in confidence of business especially foreign investors,” he tweeted.

Periodically conducted OICCI BCI Survey collects feedback from frontline business stakeholders on the environment and opportunities impacting their respective operations.

PM hails good news on economic front

A positive BCI was last seen in April 2018.

The survey is done face to face and across the country in nine cities. It covers 80pc of GDP, with higher weights given to key business centres of Karachi, Lahore, Rawa­lpindi-Islamabad and Faisalabad.

The survey sample consisted of 40pc respondents from the manufacturing sector, 35pc from the services sector and 25pc from retailers and wholesalers. The growing confidence of the business community is driven by all the three sectors, with the first two recording an increase of 65 percentage points each – manufacturing from -48pc to 17pc and services from -59pc to 6pc. The retail/wholesale sector went up 44 percentage points from — 44pc to zero.

As the lockdown restrictions were lifted, many of the manufacturing concerns went back to their 100pc capacity of production.

Retailer and wholesalers were more affected by Covid-19 restrictions as their business hours were cut short. This segment also believes that the next six months will be better with more sales and profits.

The main driving force behind the turnaround in the latest BCS is the significant increase in optimism of respondents for the next six months regarding their respective city’s business situation (21pc), industry-business situation (19pc), own business situation (20pc), anticipated sales volume increase (20pc), profit increase (22pc) and return on investment increase (19pc).

Feedback from OICCI members who were randomly included in the survey also recorded a “sharp turnaround”. It showed an improvement of 108 percentage points from minus 74pc to 34pc.

Commenting on the improved BCS, OICCI President Irfan Siddiqui said it suggests a “very dramatic turnaround” in the confidence of businesses, including foreign investors. “Despite challenging macro-economic indicators like a high exchange rate and accelerated inflation partially offset by reduced bank interest rate, the latest BCI feedback strongly reflects the optimism of the business community moving forward, contrary to the pessimism in the previous editions,” he said.

He noted that the key drivers of this optimism and turnaround in sentiments are the business community’s positive perception of the future, specifically the next six months.

The 2021-22 budget proved positive for the business community as the BCI score was significantly higher after the budget announcement, with respondents perceiving new policies “more transparent, consistent and predictable”.

According to OICCI CEO M Abdul Aleem, the three major threats to business growth identified by survey respondents are corruption (67pc), volatile energy costs (66pc) and currency devaluation (60pc).

Looking ahead, survey respondents expressed optimism for the next six months, with 25pc expecting expansion in business operations, 39pc planning new capital investment and 12pc indicating plans for increased employment in their respective businesses.

The OICCI has over 200 members from 35 countries and are present in 14 sectors of the economy. They contribute over one-third of Pakistan’s total tax revenue every year.

Published in Dawn, August 24th, 2021