LAHORE: The Overseas Investors Chamber of Commerce and Industry (OICCI) on Wednesday acknowledged that not a single new foreign investor had entered the Pakistani market in the past few years due to non-conducive business environment, non-implementation of government policies and security concerns.
During a meeting with the press, OICCI President Atif Bajwa said that though business incentives in Pakistan were satisfactory but foreign investors were shying away and only existing investors/companies were expanding their operations.
He said that $615 million foreign direct investment (FDI) in the first eight months of this fiscal year, recently reported by the central bank, was not even one per cent of the country’s GDP and well below Pakistan’s capability and past performance.
He said that despite very low recent FDI, the OICCI’s existing members were investing in excess of $1 billion annually in Pakistan, which had considerably dropped from around $5.5bn annually since 2007-08.
Bajwa said they represented 196 foreign investors with 35 countries who were operating in 14 key sectors of Pakistan’s economy.
He said their investors contributed in excess of Rs700bn, about one third of the total tax revenue of Pakistan, and provided employment to an estimated one million persons.
He said security concerns, energy supply demand gap, fast deteriorating position on World Bank’s Ease of Doing Business (EODB) indicators, gap between policy and its implementation, and inadequate protection of Intellectual Property Rights were key factors impeding the FDI.
The OICCI president regretted that top two issues highlighted in 2015 EODB were not energy but taxation procedures and problems on contract enforcement.
“Some tax authorities were unduly holding back the legitimate tax refunds of some 20 members, less than 2pc of their contribution to the exchequer, and sending wrong signals to the headquarters of such foreign investors,” he added.
Published in Dawn, March 26th, 2015