June 13, 2023 (MLN): The overall Business Confidence Score (BCS) in Pakistan now stands at negative 25% in Wave23 showing a decrease of 21% from the previous negative 4% in the Wave22 Survey conducted from March to April 2023, results announced by the Overseas Investors Chamber of Commerce and Industry (OICCI) on Tuesday showed.
According to the survey, the highest drop in confidence was recorded in the Manufacturing sector decreased by 22%, followed by the retail & wholesale trade which decreased by 21%, and the service sector by 18%.
The survey sample consisted of 42% of respondents from the manufacturing sector, 35% from the services sector, and 23% from the retail trade.
Overall, the Manufacturing sector recorded a net confidence level of negative 19%, whereas the services and retail sector stood at a negative of 26% and 35% respectively.
The OICCI BCI Survey is conducted periodically, across nine cities, covering 80% of the GDP, with higher weightage given to key business centers of Karachi, Lahore, Rawalpindi-Islamabad, and Faisalabad.
The OICCI Survey feedback covers the business environment at regional, national, sectorial, and own business entity levels in the past six months, as well as the anticipated business and investment environment in the next six months.
Amir Paracha, President OICCI observed, “The significant drop in the overall Business Confidence was not a surprise considering the volatile and extremely challenging economic situation during the past year.
Overall, three-fourth (75% vs 56% in the previous wave) survey respondents were negative on the business environment in the past six months, and going forward 23% (vs only 2% in the previous survey) were negative for the next six months.
“The acute FX shortage throughout this period has affected import and operations of many businesses, with hyperinflation, very high-interest rates, and rapid devaluation of the currency negatively impacting the business environment,” President OICCI further added.
The sentiments of the OICCI members, the leading foreign investors, who were also randomly included in the survey, stand at negative 19%, which is substantially lower, compared to the positive 6%in the previous wave.
However, OICCI members’ business confidence stands is still lower than non-members, and that has been a trend for a long period.
M. Abdul Aleem, CEO OICCI, observed, "Foreign investor’s feedback highlights their concern due to extreme restrictions on LCs for business operations, extreme delays in overseas remittances for goods, services, and dividends, besides fast diminishing return on their investment in Pakistan.”
The three major threats to business growth identified in the survey are super high Inflation, by 82% of respondents, High Taxation (74%), and Pak Rupee Devaluation (72%) which could potentially slow down business growth in Pakistan.
Going forward, 25% of the respondents indicated new capital investment plans, expansion in business operations, and employment, at a level significantly lower than wave 22.
The plan for new investment declined to negative 26%, followed by the plan to increase employment to negative 11% and expansion in business to negative 8%.
The OICCI is the collective voice of major foreign investors in Pakistan.
Over 200 OICCI members, from 31 different countries, have a presence in 14 sectors of the economy and contribute around one-third of Pakistan’s total tax revenue, besides facilitating the transfer of technology and skills and providing employment to a sizeable number of people.
About a third of OICCI member companies are listed on the Pakistan Stock Exchange and 40 members are associates of the Global Fortune 500 companies.
Besides their business operations, the OICCI members realize their corporate social responsibilities and are major contributors to various CSR activities benefitting 34 million persons from underprivileged communities.
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Posted on: 2023-06-13T15:28:19+05:00
