KARACHI, Sept 6: Heightened security risk and political uncertainty weigh heavily on otherwise optimistic business perception of overseas investors in Pakistan, reveals a survey.
Some 71 per cent of the respondents of a business survey found law and order in the country precarious and 69pc found internal political situation poor.
“A growing domestic economy, consistent and business-friendly policies have contributed to an overall favourable outlook for Pakistan as an investment destination,” Zubyr Soomro, President, Overseas Chamber of Commerce and Industry (OICCI), observed announcing results of chamber’s first annual perception survey of its members’ views about the climate of doing business in Pakistan.
He said 2007 being an election year saw increased political activity that led to create uncertainty regarding the future direction of economic policies after the change in political leadership. Moreover, fallout of Pakistan’s role in the ‘war on terror’ has increased security risk in the current scenario.
The survey found the infrastructure deficit to be a key constraint in attracting foreign direct investment.
Soomro said the government will need to plan for power, gas and water to sustain the current rate of growth.
The two most positive factors that boosted foreign investors’ confidence in Pakistan are: (a) consistency in government’s market-friendly policies of liberalisation, deregulation and privatisation, (b) growing domestic economy and expanding market.
The survey revealed that a majority of OICCI members believe that foreign investors are provided level-playing field in Pakistan. Eighty per cent of those surveyed saw the government policies to be liberal, open and non-discriminatory.
The majority of foreign companies perceive Lahore to be better governed than Karachi. The press release says that most cities were found to be business-friendly other than Quetta.
Some 18pc of OICCI members saw governance of Karachi to be poor against only one per cent unhappy with Lahore.
The survey found autonomous regulatory bodies to be more effective than ministries. From among economic ministries, the performance of finance, commerce and industry were perceived to be satisfactory as reflected by 93-95 per cent viewing them positively. However, 41pc of respondents expressed their dismay with the performance of the ministry of interior.
Amongst regulators, the State Bank of Pakistan was viewed as a star performer followed by the Central Board of Revenue and Securities and Exchange Commission of Pakistan.
The overseas businesses were not satisfied with the performance of Monopoly Control Authority and Intellectual Property Right Organisation.
Soomro saw a relationship between an efficient regulator and performance of the sector under its regulation in terms of attracting foreign direct investment. He sited the example of banking sector to illustrate his point.
The respondent of the survey believed that electricity is unlikely to meet the demand over the next few years and there will be growing water shortage.
Most members consider the telecommunication infrastructure to be adequate for future growth of the economy.
Established in 1860, the OICCI is the oldest chamber of commerce in Pakistan. The chambers’ primary function is to promote commercial, industrial and financial interests of foreign companies operating here. It has 168 members representing all major sectors of the economy. Its membership contributes 14pc of the GNP and about 32pc of the GDP of the manufacturing sector. They contribute 33pc of the total tax revenue that is way above their share in the economy. They provide direct employment to 100,000 people.