OICCI get together with Senior Media Dignitaries in Islamabad

The President of the Overseas Investors Chamber of Commerce and Industry (OICCI), Khalid Mansoor along with OICCI CE/Secretary General M. Abdul Aleem and MC Member Shazad Dada, had an informal interaction with senior media dignitaries representing 20 media houses on May 16, 2017 in Islamabad, in line with the Chamber’s policy to maintain a constant engagement with the business editors and reporters of well-known media houses, to keep them abreast about matters which are of critical interest for foreign investors as well as the overall business community so that the role of the OICCI reaches a wider audience.

During the meeting MC members informed that OICCI is the collective voice of the top 200 foreign investors from 35 countries, including 50 members associated with Fortune 500 companies. OICCI members are some of the largest tax payers in the country,  contributing over 30% of the total tax collection throughout the country, invest over $ 1.5 billion annually in expanding their footprint in Pakistan and employ around one million people .  OICCI members are also key players on the social front benefitting roughly 20 million lesser privileged people throughout the country under their very well structured CSR programs.

OICCI CEO and Secretary General presented key highlights of its bi-annual Business Confidence survey – wave 14 , released on May 10th, which has indicated a downward trend with Business Confidence score (BCS) of 13% vs 17% in November 2016 and 36% in April 2016. The business confidence of OICCI members participating in the said wave 14 was also down by 9% as compared to last November 2016 survey, but with a BCS of 37%, in the April 2017 survey, OICCI members continue to maintain significantly more positive sentiments than the remaining respondents. This is a positive indicator for future FDI inflow which can further improve with proactive settlement of issues of the foreign investors. OICCI is concerned with the downward trend in the business confidence, considering the current improved and relatively stable economic parameters, government’s ongoing focus on improving the energy and security situation, and the feel good factor being created by the expected CPEC investment and the ever improving stock market performance, notwithstanding the ongoing pressure on Balance of Trade and Balance of Payments and low level of FDI inflow in the country.

The last year’s Perception and Investment Survey of OICCI members were also discussed highlighting the opportunities and impediments to FDI inflow in the country.

Commenting on the low level of FDI, OICCI President Khalid Mansoor showed extreme concern and said that though the inflows of Foreign Direct Investment (FDI) to Pakistan has increased by 12.4 percent to $1.6 billion during first nine months of the current fiscal year 2016-17 vs $1.425 billion in the corresponding period of the last fiscal year, the FDI remains very low and not even one percent of the GDP of the country. This level of FDI is well below Pakistan’s capability and FDI inflows recorded in the past. Pakistan needs significantly higher FDI, at least three per cent of GDP, to generate the desired level of economic growth and employment opportunities. Economists’ estimates that there is a need for 2 million new jobs every year to cater to the young population and fast growth in number of educated youth.

Elaborating on the reasons for low level of FDI, OICCI CEO and Secretary General M. Abdul Aleem highlighted the key reasons which included negative perception over riding positive facts about Pakistan, poor rating in the World Bank “Ease of doing business” (EODB) survey (144/189), taxation system focused on organized sector only with adhoc levies like 3-4% Super Tax, gap in Investment incentives and policy implementation, insufficient interaction between government policy makers and investors, non settlement of issues like tax refunds and circular debt, less than satisfactory implementation of Intellectual Property Rights legislation and absence of stable and forward looking pharma pricing and regulatory regime, to serve public health goals and exports. Moreover, there is a growing feeling of over regulations in certain segment of the business and trade. 

On this occasion, OICCI also shared its key Taxation Proposals for the 2017-18 Federal Budget, covering both Specific legislative measures and Structural Reforms. It has suggested that 1) Super tax be abolished, 2) Rates of Corporate and Sales Tax be reduced and aligned to regional countries, 3) Revamping Of Withholding Tax Regime from current 55 rates to just 5 rates, 4) Incentives for new investments to be made part of every budget, 5) timely coordination on interprovincial issues like the  Workers Welfare Fund (WWF) & Workers Profit Participation Fund (WPPF) – jurisdiction and tax deductibility be clarified, 6) Rationalize Minimum Tax (MTR) Regime for large value but low margin businesses like Oil Marketing Companies, 7) Tax Policies should ensure a 10 year phasing out period so that local and foreign investors could base their plans on policies which are predictable and consistent over a reasonable time and feedback of the Largest Tax Contributors should be taken before finalization of the Finance Act, 8) Growth in tax collections, over and above the projected growth from the organized sector, should be based on broadening the tax base and bringing new tax payers into the tax net, 9) Tax Reform Commission 2016 report be judicially and transparently implemented with periodical monitoring and  10) Faster processing of pending Income/ Sales Tax Refunds. 

On this occasion the Media persons asked a number of relevant questions related to FDI, impact of CPEC on the investment climate in Pakistan, Western reaction to CPEC, OICCI members level of interest for participation in CPEC related projects, OICCI views on timelines for end of electricity load shedding in the country, whether foreign investors are impacted by corruption in the country, reasons for increase in BCS of service sector in BCI Survey wave 14, etc. All the queries were comprehensively responded by Messer’s Khalid Mansoor, M. Abdul Aleem and Shazad Dada.

In conclusion OICCI President reiterated on the need for a more focused approach to introduce growth oriented economic policies, more aggressive and result oriented taxation and trade policies to boost documentation of the economy, encourage longer term investment by both local and foreign investors, including setting up of export oriented industries, developing an effective private public partnership forum to help harness the significant potential of the country which has so far remained a dream rather than the reality.

© 2012 Overseas Investors Chambers of Commerce and Industry
The Overseas Investors Chamber of Commerce & Industry (OICCI) serves as the national point of reference for foreign investors in Pakistan. Established in 1860 as the Karachi Chamber of Commerce, it is the oldest of the existing chambers.