Despite the Covid-19 pandemic, the country managed to attract foreign investors, who invested $2.4 billion and contributed Rs1.4 trillion in taxes during 2020.
The Overseas Investors Chamber of Commerce and Industry (OICCI), comprising over 200 foreign investors in Pakistan belonging to 35 countries, released the consolidated financial contribution from its members for the year 2020 based on feedback from 170 members, 50 of whom are subsidiaries of Fortune 500 companies.
“Foreign investors are contributing in all major industrial sectors, where they are investing in goods as well as services,” said Prime Minister’s Economic Advisory Council member Dr Abid Qaiyum Suleri while speaking to The Express Tribune.
Foreign investment will be found in agrochemicals, fertilisers, pesticides, automobiles, banking, cement, chemicals, paints, engineering and industrial products, finance, insurance, IT and communication, shipping and airlines, security services, telecommunications, oil, gas and energy, etc. They are investing in goods of basic needs such as food and consumer products as well as pharmaceuticals.
Total investment in the last seven years was recorded at $13 billion, so no wonder as a group of foreign investors they were one of the largest taxpayers, Suleri added. “It shows overseas investors’ confidence in Pakistan.”
During 2020, the OICCI members, despite a very challenging and uncertain business environment due to Covid-19, contributed over Rs1.4 trillion, or approximately Rs5 billion each working day, to the tax revenue of Pakistan, approximately one-third of the total tax collection in the country, said OICCI President Irfan Siddiqui while highlighting key features of the OICCI 2020 Economic Contribution survey. “Two OICCI members paid taxes of over Rs100 billion each,” he pointed out.
However, some economists were not satisfied with the reinvestment.
“Although foreign investors come under the organised sector that is why their tax contribution is huge, total investment worth $2.4 billion is not satisfactory,” said Centre for Peace and Development Initiatives (CPDI) Executive Director Mukhtar Ahmad Ali while talking to The Express Tribune.
“Tax payment of Rs1.4 trillion means the 200 companies earned at least Rs4 trillion, however, the question is where did the rest of the profit go, was it repatriated?” he said. Ali suggested that the government should think about the situation. “If the companies are repatriating their profits to their home countries instead of reinvesting in Pakistan, they are doing the legally right thing but for Pakistan it is not a positive thing,” he added.
The country should create a favourable environment where the companies could be encouraged to reinvest instead of sending profits back as Pakistan is not only a bigger market but also a growing one, though slowly.
Commenting on the significant contribution of foreign investors to the economy of Pakistan, Siddiqui added that OICCI members were keen to play a more prominent role in a growing economy supported by a predictable, transparent and stable policy framework and a business-friendly regulatory and operating environment.
OICCI members during the last nine years have invested over $18 billion, largely in the energy, telecom, chemicals, food, fast-moving consumer goods and banking sectors.
Published in The Express Tribune, July 6th, 2021.
Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.