DOUBTS persist but the business community of Pakistan is broadly positive as the government finishes its term this week. Businessmen’s perception is based on their reading of the political/security situation and the confidence about the sustainability of the growth momentum.
The result of the Overseas Investors Chamber of Commerce and Industry’s (OICCI) six-monthly Business Confidence Index (BCI) Survey released last week confirms a positive outlook. The BCI stands at 14 per cent.
It did show a decline in confidence level as compared to the period covered under the last such survey. Business confidence was recorded at 21pc in Wave 15 released in November 2017. Foreign investor sentiment was marked to be significantly more positive.
The government finds businessmen’s perception, despite all the noise in the transformational phase, perfectly logical and a convincing indication of the distance Pakistan has covered over the past decade.
“The lack of interest in business circles over the names circulating for caretaker Prime Minister is remarkable. Everyone, it seems, is certain that the caretakers will not exceed their mandate,” a successful businessmen said.
“Yes, we have come a long way. There are conflicts and differences. The polarisation on the issue of the supremacy of the Parliament exists. Is it not heartening that all through dharnas (sit-ins) and court verdicts against the ruling party leadership the democratic system did survive?
“This tells you something about the real change in the making in Pakistan. It is no mean achievement in itself. After completing its term the second consecutive elected government is ready to pass on the baton. This merits celebrations in a country where democratic governments in the past have been sent packing at the drop of a hat.
“Don’t you remember the fates of the most compliant Mohammad Khan Junejo and Jamali governments?” commented Sindh Governor Mohammad Zubair, also a former minister for privatisation, in an exclusive interview with Dawn on the expected economic future of the country and the current sentiments of the business class.
After counting the economic achievements of his party in terms of high growth, contained inflation, more energy, better infrastructure, and marked improvement in the security situation, Mr Zubair mentioned the external sector shortfalls.
“Save a miracle, a return to International Monetary Fund (IMF) folds is a foregone conclusion. I see no point in being delusional,” he said probably referring to Finance Minister Miftah Ismail’s statement, in which he had said that if managed diligently external sector worries can be addressed without the IMF’s support.
“Financial stability and economic credibility internationally is crucial and can’t be risked at this juncture”, he added, sounding in favour of approaching the IMF in the immediate future.
Besides democracy growing roots he saw the China-Pakistan Economic Corridor (CPEC) as a solid source of strength for the economy. Dispelling the impression of Chinese indifference towards Pakistan’s political trajectory, he believed that they saw future CPEC projects as more secure under democracy in Pakistan.
“At a recent CPEC conference in Karachi, Chinese Ambassador Yao Jing’s position on the issue was refreshing. To our pleasant surprise the envoy talked in favour of a representative government and criticised destabilising elements,” he asserted.
When reached over phone, business leaders were reluctant to go on record but concurred with the view that any extra-constitutional move will be strongly resented by top business groups, unlike in the past.
“In business circles the discussion is focused on probable winners and business-friendly candidates in key political parties. Holding timely general elections in the country is taken for granted.
“The lack of interest in names circulating for the caretaker Prime Minister is also remarkable. Everyone, it seems, is certain that caretakers will not exceed their mandate,” a leading light amongst the new generation of successful businessmen said while discussing the situation.
The tycoons in Pakistan are seemingly learning to adapt to the disruption caused in an election year. “I hate the election circus but democracy is inconceivable without this exercise at intervals. The uncertainty in the transformational phase is unnerving. It breaks the growth momentum. Investors in this phase prefer a pause to avoid missteps,” said another businessman planning a long holiday overseas with the family.
“We just want this transformational phase to conclude quickly and peacefully so that we can move on with our business,” the head of a major business group told Dawn in Karachi.
“The outgoing government, with the help of a little luck, posted a fairly decent economic performance in several key areas in its tenure.
“Yes, they left the structural economic weaknesses unattended and tried to make most of whatever little space for manoeuvring the status quo permitted, and still they had to pay the political price for pushing limits,” said an analyst referring to the ouster of the former Prime Minister.
In a published statement last week, Bruno Olierhoek, CEO Nestlé Pakistan and president of OICCI, commenting on the results of the BCI survey attributed the decline in business confidence to the challenges of the past six months.
“OICCI members believe it should be taken as a wake-up call by the highest authorities and leaders, who should resolve current concerns of investors on matters of taxation, mounting tax refunds and circular debt,” he said.
He demanded in the same press release that the government focus on harmonisation of policies across different federal and provincial jurisdictions, supported by visible improvement in good governance and a policy framework which is progressive, transparent, consistent, and predictable to achieve the much higher potential of economic growth.
Published in Dawn, The Business and Finance Weekly, May 28th, 2018