December 07, 2022 (MLN): The overall Business Confidence Score (BCS) in Pakistan now stands at negative 4% in Wave22 showing a decrease of 21% from the previous positive 17% in the Wave21 Survey conducted from March to April 2022, results announced by Overseas Investors Chamber of Commerce and Industry (OICCI) on Wednesday showed.
According to the survey, the highest drop in confidence was recorded in the services sector decreased by 24%, followed by the retail & wholesale trade which decreased by 22%, and the manufacturing sector by 20%.
The survey sample consisted of 42% of respondents from the manufacturing sector, 33% from the services sector, and 25% from the retail trade.
Despite recording a significant drop in confidence of 20%, the manufacturing sector recorded a net confidence level of positive 3%, whereas the services and retail sectors stood at negative 8% and 14% respectively.
OICCI BCI Survey, conducted periodically face to face, across the country in 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.
Ghias Khan, President of OICCI said, “The substantial decline in the overall Business Confidence to negative 4% is regrettable but not surprising considering the highly challenging political and economic situation during the past six months”.
Besides very high inflation and increased fuel prices, the significant currency devaluation also dampened economic activity. The record level of rains during August led to severe flooding in Sindh and other parts of the country which further restricted business activities, he added.
Overall, more than half (56% vs 19% in the previous wave) of survey respondents were negative about the business environment in the past six months, and going forward only net 2% against 18% in the previous survey were positive for the next six months.
Commenting on the business situation for the next six months, OICCI Vice President Amir Paracha observed, “These are challenging times, and the authorities are doing all they can to navigate the enormous challenges in front including managing inflation, restricted availability of foreign exchange and resource constraints”.
“Key stakeholders especially foreign investors will continue to support the authorities in taking long-term policy measures to streamline the economic fundamentals including fair taxation for all and facilitate business and investment in the country”, Amir added.
The sentiments of the OICCI members, the leading foreign investors, who were randomly included in the survey, stood at positive 6%, substantially lower than the positive 33% in the previous wave.
Foreign investors have in the past also shown higher confidence than non-members.
Ghias Khan said, “foreign investors’ feedback could have been more positive but for serious concerns on a few critical issues like the undue delay in revising the pharma pricing and the extreme delays in overseas remittances for goods, services, and dividends”.
Such actions are seriously counter-productive for attracting FDI in the country, Ghias added.
The three major threats to business growth identified in the survey are inflation 78%, high taxation 71%, and currency devaluation 70% which could potentially slow down business growth in Pakistan.
Looking ahead, only 18% against 34% in Wave 21 expect expansion in business operations, 2 planning new capital investment, and 7% of respondents expect increased employment in their respective businesses.
The OICCI is the collective voice of major foreign investors in Pakistan. The 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: 2022-12-07T15:04:46+05:00