Daily Times

The All Pakistan Business Forum (APBF) has asked the government to announce special incentives for a cash-strapped SMEs with a view to save the economy, as they represent more than 90 percent of around 3.2 million business enterprises in Pakistan, contributing 40 percent to the GDP, employing more than 80 percent of non-agricultural workforce, and generating 25 percent of export earnings.

APBF President Syed Maaz Mahmood said that Pakistan has remained a potential market for foreign investors, who still have plans to make fresh investment in the country, but they have continued to wait for the return of economic stability. He highlighted uncertainty in the rupee-dollar parity as one of the major concerns of foreign investors. He said a slowdown in the economy had badly impacted business confidence. It is must for the authorities concerned to first create an enabling environment for the local businessmen desiring to make new investment.

Maaz Mahmood advocated the need for raising the country’s tax base so that tax-to-GDP ratio improves from current poor level. He urged the trade officers to explore opportunities to diversify exports of goods and services in their respective areas, asking them to meet the challenges faced by Pakistan in European markets.

APBF Chairman Ibrahim Qureshi also suggested the ministry to devise strategies for promotion of Pakistani products, calling upon trade officers to take advantage of opportunities offered by China-Pakistan Economic Corridor.

Ibrahim Qureshi said that previously, foreign investors mostly poured money into the sectors which did not pose a risk to their profit margins due to rupee depreciation such as the power sector. It is hoped that Pakistan’s economy will now gain growth momentum, which should encourage foreign investors to invest in new projects, he added.

Maaz Mahmood said that poor economic and political climate have been additional factors in bogging down the business and investment in the country over the last one year. What is worrisome is the fact that the consecutive decline over the last 4 years was also seen in FDI inflows.

The APBF President said that the economic crisis has forced the global investors to put their new investment plans on hold, foreign direct investment was 25 percent lower than the investment registered last year. He said there is no visible improvement in employment while the small and medium industries (SMEs)—the main providers of jobs— are struggling because of lack of funds and demand. The job losses at the original equipment manufacturers not significant but at auto venders, where bulk of auto-related jobs exist are operating with minimum possible staff.

It is to be noted that inflows of Foreign Direct Investment (FDI) in the country declined by 10 percent during the first nine months of this fiscal year (FY24). The State Bank of Pakistan reported that the country fetched FDI amounting to $1.1 billion during July-March of FY24 compared to $1.216 billion in the same period of last fiscal year (FY23), depicting a decline of $118 million. During the period under review, FDI inflows were $1.959 billion against $860 million.

Month-on-month basis, net foreign direct investment settled at $258 million in March 2024, compared to $170 million during March 2023. The FDI inflows in March 2024 are highest since June 2022.