The business community had higher expectations from the government and Finance Minister Muhammad Aurangzeb. They expressed disappointment over the government’s lacklustre response to reports of multinationals planning to exit and local companies moving their back offices abroad.

Pakistani businessmen viewed PML-N as more business-friendly than other political parties and expected that the finance minister would champion their interests in the cabinet.

This perception about the party stems from PML-N’s historical legacy, including the 1991 deregulation, liberalisation and privatisation programme launched under former prime minister Nawaz Sharif, which aimed to promote free market principles, encourage private ownership and attract foreign investment.

Similarly, Finance Minister Aurangzeb, with his background as a former head of a major private bank and chairman of the Pakistan Business Council (PBC), was anticipated to be a strong representative of the business community in the government.

Members of the government’s economic team and leaders of a key coalition partner, PPP, were approached for comments on measures being taken or considered to address the concerns of the business community and prevent them from relocating any part of their operations abroad due to the challenging environment.

Businessmen express concern over the government’s lacklustre efforts to help their community, stressing the importance of communication and connectivity in attracting foreign investors

Some well-placed sources claimed that the issue is being discussed at the highest levels, with the relevant ministries and departments tasked with briefing the cabinet on potential solutions.

“We are working on a robust programme to stimulate business activity and attract foreign investors. The government plans to launch this programme early next month,” asserted a source in Islamabad, though no concrete evidence was provided to support the claim.

At the time of filing of this report, responses from government officials and political party leaders were still pending.

Miftah Ismail, former finance minister and leader of the newly formed Awam Pakistan Party, dismissed expectations from the government as misplaced. “The government has done little so far to set things right. I don’t think they care, even though their negligent behaviour will exacerbate the already severe unemployment crisis,” he remarked.

Offering his suggestions he stated: “The government should promptly ease internet restrictions, reassess utility prices, fund subsidies by cutting government expenditures, lower taxes on salaries, announce the National Finance Commission and initiate discussions for the next award.”

A public policy analyst in Islamabad argues that the government appears to be preoccupied with petty politics, leaving little time to address the economy’s needs. A Karachi-based commentator attributed the dire situation to the government’s incompetence, bluntly stating, “The country is witnessing a rampant display of sheer stupidity.”

Ehsan Malik, CEO of PBC, downplayed recent media reports. He clarified: “We are not aware of any multinational corporations contemplating exiting Pakistan due to the recent disruptions in connectivity. However, for those companies considering relocating their back offices to Pakistan as part of a global diversification strategy, factors such as communication reliability and speed will be weighed against other alternatives.

“Following the devaluation of the rupee, Pakistan has become a more competitive location, with a high number of English-speaking professionals and a well-developed accounting sector providing additional advantages. Global companies typically diversify their outsourcing across multiple locations and continuously assess their options.

“Telenor, Standard & Poor’s, British American Tobacco, International Business Exchange, The Resource Group and Ernst & Young are examples of global companies with back offices, business process outsourcing, and call centres in Pakistan.”

The Overseas Investors Chamber of Commerce and Industry took a more critical stance. Abdul Aleem, the Secretary-General, commented, “We have not seen any proactive measures from federal or provincial governments to address concerns take steps to retain companies in Pakistan and prevent them from relocating abroad.

Attracting new investment and supporting existing foreign investors demands serious commitment and concrete actions.“

Nasim Beg, a financial consultant and board member of multiple companies, wasn’t overly concerned about the departure of foreign investors but emphasised the need to support local businesses.

He noted, “While the exit of multinationals might be unsettling, it’s crucial to focus on strengthening domestic firms. Local businesses are relocating due to the overreach of the National Accountability Bureau, high taxation and growing economic mismanagement risks. We may be better off with businesses owned by domestic shareholders if we can address these issues effectively.”

Majyd Aziz, a prominent business leader of Karachi, suggested that the government was either willfully ignoring the issue or had instructed its spin doctors to steer clear of the topic to prevent media distortion and hype.

“An exodus of foreign companies reflects a deep lack of confidence and trust in the government. Such reports will undoubtedly send a negative signal to potential foreign investors. In my opinion, only the boldest and most courageous foreign investors will be willing to bring much-needed investment into Pakistan in the coming years,” he noted.

Published in Dawn, The Business and Finance Weekly, August 26th, 2024