Karachi: “While US Businesses are positive and remain committed to Pakistan, the reality is that half of the survey participants believe that the international perception of Pakistan is poor which makes it challenging for them to sell investment and expansion plans at a regional level.”
This was stated by Arshad Saeed Husain, President of American Business Council of Pakistan (ABC) while announcing the results of a Perception Survey conducted by ABC.
The survey allowed ABC members to rate their satisfaction on various economic, regulatory and political factors that affect the performance and growth of businesses operating in Pakistan over FY14-15. Though American Businesses in Pakistan are adversely affected by poor law and order situation, however 80% respondents are optimistic about the future in longer run.
“Concrete action must be taken by policymakers to make Pakistan a preferred investment destination. International standing and perception is extremely important as Pakistan competes with other Asian players to attract foreign capital in the form of trade exports, human resources, tourism and most importantly foreign direct investment,” added Arshad.
“A political, economic and social environment that is predictable over the long term does the most to strengthen confidence and forms the basis of a country’s development,” he added.
The business climate was rated on each of the various factors influencing it; including implementation and consistency of trade and competition policies, government development budget, domestic market, internal and external political climate and law and order. Of these factors, law and order received the worst response, with 74% of respondents rating it poorly. Even though PAK Army is reportedly making progress with Operation Zarb-e-Azb and the government is conducting a targeted operation to rid the country of professional trouble-mongers, 48% of ABC respondents felt that the law and order situation had affected business operations/investment plans adversely. Other areas of concern included policy consistency and implementation which have been rated poorly by over half of the survey participants.
A positive indicator is that over 65% of respondents have indicated that they plan to invest in Pakistan over the next 12 months and 80% are optimistic about the long-term economic and operating climate. For 2014-15 the vast majority of respondents rated the business climate of Pakistan as satisfactory with 11% giving it a poor rating. This is a marked improvement over 2013-14 when 44% of participants rated the business climate as poor. The overall positive perception of American investors reveals an expectation of some economic stability and an improvement in Pakistan’s economic environment.
With the performance of each of the various federal ministry directly affecting the business climate, participants were asked to rate the performance of each ministry. In this regard, the overall trend reflects a slight improvement in the performance of the various ministries from last year. The Ministry of Finance and Economic Affairs enjoyed a significant improvement in rating with 77% of participants rating its performance as fair versus 2013-14 when 50% of participants rated the performance of the Ministry as fair and 44% rated it as poor. The Ministry of Science and Technology also showed a marked improvement with 74% of participants reporting the performance as fair and 20% reporting it as poor. In 2013-14 just 47% has rated the performance of this ministry as fair and 43% had rated it poorly.
The ABC is one of the largest investor groups in Pakistan with 68 members – most of them represent Fortune 500 companies. They operate in various sectors i.e. health care, financial services, information technology, chemicals & fertilizers, energy, FMCG, food & beverage, oil and others.
ABC members have cumulative revenues of US$ 3.73 billion. ABC members contribute a sizable amount to the national exchequer every year as direct and indirect taxes – last year they contributed Rs. 77 billion.
The ABC members also employ over 34,000 people directly who support 140,000 dependents and indirectly employ nearly one million people with agents, distributors and contractors.