KARACHI: Overseas Investors Chamber of Commerce and Industry (OICCI) President Amir Paracha warned on Tuesday of “mass industrial unemployment” caused by the curbs on raw material imports.

Speaking to a group of journalists at the OICCI head office, the chief representative of 200-plus multinational companies from 35 countries and 14 sectors said business continuity is at stake for most foreign players operating in Pakistan.

“Banks are either refusing to open the letters of credit (LCs) or opening them for small amounts only. How can you manufacture anything when there’s no raw material?” said Mr Paracha, who also serves as CEO of Unilever Pakistan Ltd.

Pakistan has been facing a severe dollar shortage as the loan programme with the International Monetary Fund (IMF) remains in limbo. The government has put in place formal and informal restrictions on the outflow of dollars as a stop-gap measure to navigate the liquidity crunch. But the import

A survey shows half of multinationals are either decreasing production or laying off staff

curbs have turned into a semi-permanent feature over the last few months, closing down vast segments of the country’s

industrial sector for the unavailability of raw materials.

Moreover, multinationals haven’t been able to fully repatriate their profits in the form of dividends to their overseas headquarters amid restrictions on the dollar outflow.

“My idea is that the pending repatriations are to the tune of $1.5 billion,” said Mr Paracha in response to a question.

According to M. Abdul Aleem, secretary general of the OICCI, multinationals have explicitly told the chamber that their overseas headquarters want them to hold back on all new initiatives in Pakistan for the time being.

“Our members have told us they’ve projects worth $2bn ready to be rolled out. But they’re all waiting for an opportune time,” he said.

Foreign direct investment (FDI) in the first eight months of 2022-23 was $784.4 million, down 40.4pc from a year ago.

“That’s the level of FDI a single company should ideally attract in a year,” said Mr Aleem, adding that the country’s potential for FDI is around $9bn a year as per the global standard of 3pc of GDP for developing economies.

According to noted economist Hafiz A. Pasha, the number of unemployed people will increase by over two million to 8m by the end of 2022-23. Given that the labour force consists of 75.3m people, he said the unemployment rate will approach 10pc “probably for the first time”.

A new survey in which 69 OICCI members took part shows nine of every 10 businesses have been “impacted negatively” during the last three months.

The top issues they’ve faced in the last quarter are import/remittance restrictions (20pc), rupee devaluation (17pc), inflation/energy cost (15pc), high taxes/pending tax refunds (13pc), policy inconsistency (10pc) and political inconsistency (10pc).

The survey revealed that one of every two participants is “either decreasing the production or laying off staff”. Moreover, half of the respondents are “either considering restructuring or shutting down partially/fully”.

“The worst affected sectors are pharma and oil marketing. Neither of these deals in what you call luxury goods. Their margins are squeezed because of their regulated nature. The government must liberalise these segments,” said Mr Paracha.

“It’s not the job of the country’s finance minister to fix the price of Panadol.”

Published in Dawn, April 12th, 2023