Pakistan loses Rs55bn foreign investment

Tuesday, December 22, 2009
By our correspondent

KARACHI: Amid unfavourable socio-political conditions, Pakistan saw a 37 per cent (Rs55 billion) loss in investment by overseas investors, says an investment survey report of the year 2009 released by the Overseas Investors Chamber of Commerce and Industry (OICCI) on Monday.

The investment report, reviewing fiscal years 2007 and 2008, highlighted a staggering lack of confidence by investors to bring additional capital in Pakistan and total investments declined from Rs148 billion in FY08 to Rs93.7 billion in 2009.

Gross revenue increased from Rs1.2 trillion in FY07 to Rs1.6 trillion in FY08, showing a 31pc rise.

However, there was a shortfall of 15pc in profit before tax for the stakeholders falling from Rs122 billion in FY07 to Rs104 billion in 08. Total taxes paid by members of the overseas investors chamber increased from Rs211.88 billion in FY07 to Rs229.7 billion in FY08, marking 8.41pc increase. “Although this is a sign of growth but at the same time it highlights Pakistan’s amplified dependability on direct foreign investment, marking a negative trend,” said Farrukh Khan, President of OICCI, while unveiling the report.

With constant turmoil in the country, members of up to 25pc tax contributing chamber face various issues of high cost of doing business, declining profitability, high taxes, lack of proper policy implementation and the law and order situation.

“In such a situation, unless the government takes prompt measures, it is difficult to maintain the foreign investment as each company takes its own decisions of policy and plannings of investment,” said Farrukh. Talking about the measures to guarantee a regular flow of overseas investment in the country, he said the report highlights that instead of targeting the existing tax payers with more burden, the government should broaden its tax net and tackle interest rates.

He elucidated that power shortage and Afghan transit trade are two issues that pose a great threat to direct business for investors.

Focusing further on the Afghan transit trade he said “it results in illegal imports of our products into the country further hampering our businesses.”

He added that the current investors face issues in sectors involving circular debt, refineries margins and the pharma pricing. In a comment on the economy of Pakistan he held that although Pakistan is not doing as good as it should be but still the chamber sees some improvement and stability in the coming year in 2010 which may help investors regain some of their confidence.