Inside Financial Markets

US firms to increase investment as business climate improves

US companies, operating in Pakistan, are eager to increase investment in various sectors in the country within the next one year as they pose trust on economic stability and improving business climate, found a survey.

“Over 78 percent of respondents indicated that they plan to invest in Pakistan over the next 12 months as compared to 65 percent from last year and 83 percent are optimistic about the long-term economic and operating climate,” said the American Business Council (ABC) of Pakistan said in a statement on Monday.

The ABC is one of the largest investor groups in Pakistan with 67 members – most of them represent Fortune 500 companies. They operate in various sectors, including healthcare, financial services, information technology, chemical and fertiliser and energy. The council’s members have cumulative annual revenue of four billion dollars. Their contribution to national exchequer, through direct/indirect taxes, is approximately Rs102 billion.

Privatisation Minister Mohammad Zubair, on his return from Washington last week, told The News that a floodgate of investment from the U.S. is to be opened as the investors are appreciating the economic initiatives of the incumbent PML-N government.

China already pledged $46 billion in investment into the country’s infrastructure development under the China-Pakistan Economic Corridor projects.

In last June, Morgan Stanley Capital International (MSCI), the US equity indices provider, included the Pakistan Stock Exchange in its benchmark emerging-market index that is likely to attract multimillion dollars of portfolio investment into the Asia’s best performing market. The final MSCI reclassification would coincide with the May 2017 semi-annual index review.

But, foreign companies expressed their concern over the government’s tendency to introduce minibudgets and changes in policies during the course of a fiscal year. “Such steps negatively impact on the existing as well as new investments,” said the ABC.

The Overseas Investors Chamber of Commerce and Industry, the key body representing foreign investors in the country, also often criticised the government policies. It said the government needs to engage with the key stakeholders, both local and overseas, to revise its policies and action plans to recapture the proportionate share of foreign direct investment being lost to regional countries.

The ABC’s perception survey rates business climate on the basis of implementation and consistency of trade and competition policies, development budget, internal and external political climate and law and order factor. The survey found that there was a significant improvement in law and order situation.

In 2015/16, a vast majority of respondents rated the business climate as satisfactory with only eight percent giving it a poor rating. In 2014/15, 11 percent of the participants rated the business climate as poor.

Total 78 percent of the respondents termed the performance of key petroleum ministry as fair in the last fiscal year as compared to 46 percent in the preceding fiscal year, according to the survey’s findings.

“The overall positive perception of American investors reveals an expectation of some economic stability and an improvement in Pakistan’s economic environment,” said the council.

 

Baqar Hussain

A Wannabe CFO, just had stepped in the corporate sector, willing to explore every aspect here and learn as mush as i can, awareness for those who dont, get the info where ever possible and stay up to date always.

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