The recent OICCI survey results have spread negative sentiments among the investors.
Business confidence in Pakistan has been reported to show a worrisome decline of 19% from 36% in October-March 2015-16 to 17% for April-September 2016, according to a recent survey report by Overseas Investors Chamber of Commerce and Industry (OICCI).
As part of the Business Index (BCI) Survey Wave 13, the results showed a decline in business confidence across all segments of trade and industry, in response to prevalent concerns of investors about energy challenges, political volatility, security issues, and uncertain government policies and regulations.
“Overall business confidence score remains positive, but the positivity declined from 36 percent in April 2016 to only 17 percent with a drop of 19 percent,” said the survey, conducted throughout September and October.
The only two cities with a positive outlook compared to other cities were Lahore (29%) and Rawalpindi (22%). Rest of the cities were recorded as: Karachi (18%), Sialkot (12%), Peshawar (8%), Multan (4%), Faisalabad (1%), and Quetta (-14%).
OICCI President Shahab Rizvi expresses his concerns over the survey results and points it out as a key watch out for the government.
“Latest survey results, despite being significantly positive versus two years ago, represent a significant correction compared to the previous survey in April 2016”, commented Shahab Rizvi.
The decline was observed is almost all business sectors with a reported drop of 28% in the services sector, 21% in the retail sector, and 12% in the manufacturing segment of the local industry.
In response to the declining confidence in the service sector, OICCI reports a downward drift in the sentiments of leading foreign investors with a fall of 9% points to 46% in the Wave 13 results.
The reported decline in the business could also be a result of the natural rebalancing of exaggerated initial expectations. However, inconsistency of policies and incompetent management of security and energy issues played a vital role in the recent correction.
“The BCI survey provides a very solid incentive to the authorities to keep focus on improving security and energy situation besides streamlining governance in commercial matters,” said Rizvi.
However, in the wake of Pakistan’s recent economic alliance with China (CPEC), many of the survey respondents showed optimism in terms of a surge in demand in the near future.
Rizvi also recognized the need for more interaction with the business community to influence its overall perception of the future growth and sustainability of the business sector.