ISLAMABAD: Showing concern over poor progress on documentation of economy, high interest rates and devaluation, the foreign investors operating in the country have expressed cautious optimism of the future growth potential.

This was found by the Perception and Investment Survey 2019 conducted by the Overseas Investors Chamber of Commerce and Industry (OICCI). The biannual survey was conducted during the last quarter of 2019 among the leading foreign investors of the country, said a press release on Thursday.

OICCI President Shazad Dada said the survey showed that on a number of business climate parameters foreign investors remained positive and were upbeat on the performance of their respective business entities in Pakistan, with 75pc of the respondents indicating willingness to recommend new FDI in Pakistan to their parent companies.

He said the foreign investors participating in the survey though showed concerns with some areas of doing business, yet the case for business growth potential and opportunities in Pakistan was supported by over 7 out of 10 respondents indicating their plans to invest more or similar amounts over the next 1 to 5 years.

Majority satisfied with business performance

The respondents said compared to the previous 2017 survey, the federal government was better engaged with stakeholders on policy issues and its senior functionaries appear to have better understanding, and commitment to resolve investors issues.

A number of economic disciplinary measures announced by the government last year, like the partial withdrawal of incentives on new investments affected

OICCI members, said Mr Dada adding the strong resistance, especially from a large segment of the market players in the informal economy, towards many bold measures to document the economy had negative impact on the business operation of many of OICCI members.

“Delayed action on some other key concerns, like inter-provincial coordination issues, matters relating the renewal of cellular mobile operators’ licences, extended time in processing corporate remittances, and capacity issues in some of the regulatory bodies have been raised as concerns for many businesses”, the statement said, adding nearly 30pc devaluation of the rupee, increase in the central bank’s discount rate from 6.5pc in July 2018 to 13.25pc in third quarter 2019 led to an increase in the cost of doing business.

The foreign investors expressed concern that two key issues including the overdue tax refunds of around Rs80bn and the energy sector’s circular debt remained largely unresolved.

“This challenging business environment is duly reflected in the feedback as the foreign investor’s perspective of doing business has seen a major decline in the 2019 survey as compared to the last 2017 survey”, Dada said.

More than 70pc of the foreign investors were partially satisfied with “Policy framework” relating to business but have concerns on the implementation of policies. More than half of the respondents were concerned on the consistency and predictability of monetary and fiscal policies.

When asked to name top five key pain points to their business , the CEOs of OICCI membership identified, in order of priority, rupee devaluation, gap between policies and their effective implementation, increasing tax burden, cost of doing business and increase in borrowing cost/interest rates.

A number of companies belonging to the fast moving consumer goods (FMCG), food and healthcare sectors have identified counterfeiting, illegal imports and dumping of cheaper imported products as major risks to their businesses.

Commenting on the key pain points, the OICCI president said a noteworthy feedback from the 2019 survey was the deletion of security as one of the top five challenges.

The foreign investors have expressed concern on lengthy timeline in contract enforcement with over two third respondents sharing that it took around five years in resolving commercial dispute. Majority of the respondents support the ‘CPEC’ projects, and have also identified key sectors where new foreign direct investment could be attracted with the right policies and improved perception about Pakistan as almost three quarters of the respondents indicate that their parent companies were influenced by negative image of Pakistan in the foreign media or other sources.

There was a welcome sign for the young people entering the job market, with nearly 35pc of the OICCI survey respondents indicating that they will add manpower going forward. Moreover, two thirds of the respondents forecast increased sales while higher profits was forecast by half of the respondents.

Published in Dawn, February 7th, 2020