KARACHI: Pakistan’s overall Business Confidence Score (BCS) stood at negative 4 per cent in the second half of 2022, showing a decrease of 21 per cent from the previous positive 17 per cent in Wave 21 Survey conducted in March to April 2022.
Announcing the results of its comprehensive Business Confidence Index (BCI) for September to October 2022, the Overseas Investors Chamber of Commerce and Industry (OICCI) said the highest drop in confidence was recorded in the services sector (24 per cent); followed by retail and wholesale trade (22 per cent) and the manufacturing sector (20 per cent).
The survey sample consisted of 42 per cent respondents from the manufacturing sector, 33 per cent from the services sector and 25 per cent from the retail and wholesale trade.
Despite recording a significant drop of 20 per cent, the manufacturing sector recorded a net confidence level of positive 3 per cent, whereas the services and retail sectors stood at negative 8 per cent and 14 per cent, respectively.
Ghias Khan, president of the OICCI, said: “The substantial decline in the overall business confidence to negative 4 per cent is regrettable but not surprising, considering the highly challenging political and economic situation during the last six months. Besides high inflation and increased fuel prices, the significant currency depreciation also dampened the economic activity.”
“The record level of rains during August, leading to severe flooding in Sindh and other parts of the country, further restricted the business activities,” he added.
The OICCI BCI survey, conducted periodically face-to-face, across the country in nine cities, covering 80 per cent of the GDP, with higher weightage given to key business centres of Karachi, Lahore, Rawalpindi-Islamabad and Faisalabad.
The feedback covers the business environment at regional, national, sectorial and own business entity levels in the last six months, as well as the anticipated business and investment environment in the next six months.
Overall, more than half (56 per cent against 19 per cent in previous wave) survey respondents were negative on the business environment in the last six months and, going forward, only net 2 per cent (against 18 per cent 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 said: “These are challenging times and the authorities are doing all they can to navigate the enormous challenges ahead, including managing inflation, restricted availability of foreign exchange and resource constraints.”
“The 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,” he added.
The sentiments of the OICCI members, the leading foreign investors, who were randomly included in the survey, stands at 6 per cent, substantially lower to 33 per cent in the previous wave. The foreign investors have in the past also shown higher confidence than non-members.
Ghias Khan said: “The foreign investors feedback could have been more positive but for serious concerns on a few critical issues such as the undue delay in revising the pharma pricing and the extreme delays in overseas remittances for goods, services and dividends. Such actions are seriously counterproductive to attract foreign direct investment (FDI) in the country.”
“The three major threats to the business growth identified in the survey are inflation (78 per cent), high taxation (71 per cent) and the rupee depreciation (70 per cent), which could potentially slowdown the business growth in Pakistan,”. He added.
Looking ahead, only 18 per cent (34 per cent in Wave 21) expect expansion in business operations, 2 per cent (21 per cent in Wave 21) planning new capital investment and 7 per cent respondents (16 per cent in Wave 21) 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 the OICCI member companies are listed at the Pakistan Stock Exchange and 40 members are the associates of the Global Fortune 500 companies.
Besides their business operations, the OICCI members realise their corporate social responsibilities and are major contributors to various corporate social responsibility (CSR) activities, benefitting 34 million people from the underprivileged communities.
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