Overseas investors irritated by higher taxes, gaps in policy implementation

KARACHI: Overseas Investors Chamber of Commerce and Industry (OICCI) has expressed concerned over high burden of taxes and termed uncertainty over taxation policies as the major irritant facing flows of foreign direct investment (FDI) despite the country being on the  radar of investors.

Addressing a media briefing on Thursday, President OICCI Irfan Wahab said Pakistan was on the radar of major foreign investors waiting for the right timing and opportunity to enter. “The country should not miss the opportunity. Pakistan is a land of opportunities and going forward is bound to grow rapidly as Asia grows in attracting investment and trade”.

Pinning high hopes on the special economic zones under the auspices of China Pakistan Economic Corridor (CPEC), OICCI President said these zones would open doors for additional flows of FDI. “Small and medium enterprises (SMEs) from various countries including Japan and European countries have evinced interest in investing via these economic zones lest these are operated as per international best practices”.

Wahab said higher cost of doing business and gaps in policy implementations were the irritants that had gone beyond tolerance levels. “Consensus on economic issues owned by all political stakeholders is the need of hour.”

He said despite lackluster economic activity during the past one year, OICCI members re-invested over $2.7 billion in the country, which is almost at par with the total FDI of $2.8 billion received in the country during the same period.

“In the past six years, OICCI members have re-invested $10.4 billion, whereas FDI inflow in the country was only $11 billion, which reflects the extreme confidence of the leading foreign investors, who are already operating here, on opportunities in Pakistan.”

Giving a balanced assessment of the business environment, OICCI presented key highlights of its bi-annual business confidence survey – wave 16, released in May this year, which had indicated a downward trend with an overall Business Confidence Score (BCS) of 14 percent. “However, the BCS of OICCI members only, was significantly more bullish at 38 percent, reinforcing a clear message about the positive sentiments of foreign investors,” Wahab added.

President OICCI said the businesses expected an improved governance structure, solid progress on improving Pakistan’s positioning on World Bank’s ‘Ease of Doing Business’ parameters, supported by strong economic performance through substantially higher tax collections, effective use of technology to broaden the tax base, strict enforcement, accountability and capacity building in the key government functionaries. “There is a great opportunity for significant productivity gains through research and digitalization in agriculture, energy and water resource management”.

OICCI leadership greatly emphasized the need of focus on economic priorities, political stability, ability to timely leverage the positive story on Pakistan internationally like turnaround on security and law and order, besides raising the standing of Pakistan in all international measures like competitiveness survey, ease of doing business survey, etc.

More importantly, the government should leverage technology in transforming the economy, reform tax regime in line with regional benchmark and broaden the tax base through use of data and technology.

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