Business confidence
Despite the multifarious challenges the economy is facing, the latest reports show that business confidence is on the rise. Overseas Investors Chamber of Commerce and Industry (OICCI) has shared the results of its Business Confidence Index (BCI) Survey - Wave 15, which shows that the overall business confidence in Pakistan stands at 21 percent positive, a significant improvement over the 13 percent recorded in the Wave 14 results announced in May 2017.
The 8 percent improvement reflects a major turnaround after the negative trends recorded in the last two surveys - wave 13 and 14, indicating that the business community is once again bullish and increasingly confident of the investment opportunities available in Pakistan.
A detailed analysis of the findings of the survey proves that the uptick in confidence was largely influenced by the retail and wholesale trade sector which led the upswing with 40 percent positive sentiment, recording 27 percent improvement as compared to Wave 14. The manufacturing sector followed with a confidence level of positive 16 percent showing a substantial net increase of 7 percent, while the service sector at 15 percent net positive sentiment recorded a marginal decline of 3 percent as compared to the Wave 14 survey.
It is relevant to recall here the last survey on business confidence which registered a downward trend. According to the Overseas Investors Chamber of Commerce and Industry's (OICCI) quarterly survey issued in May, business confidence was in decline due to a drop in capital investments and instability in the country. The 'Business Confidence Index (BCI)-Wave 14' showed that the overall confidence stood at 13%, down by four percentage points over the previous score of 17% reported in November 2016 (Wave 13). Notable is the fact that the score of 13% is significantly lower than the highest-ever BCI score of 36% recorded in a similar survey result issued in April 2016.
BCI is a bi-annual assessment sponsored by the OICCI since June 2010. OICCI BCI survey, conducted every six months, is a comprehensive review of both local and global business aspects and is indicative of the direction in which the economy is moving based on the perceptions of key stakeholders in various sectors. Respondents in the survey are from common companies as well as OICCI members, an association of over 195 multinationals operating in Pakistan. The May 2017 survey of various business sectors reflected that financial services (58%), chemical/cement (27%), non-metallic (23%) and real estate (21%) were most booming sectors, whereas tobacco (-38%), petroleum (-13%) and textile (-2%) emerged as most affected sectors. However, the services sector gained confidence by 4pc while the business confidence score of manufacturing and retail sectors declined by 9pc and 4pc respectively.
According to experts, the findings of the latest survey have great importance in view of the current economic indicators. These have come at a time when the government is focusing on improving the energy and security situation and positive fallout is expected from the ongoing CPEC projects. There are no doubt some positive developments but challenges remain in many sectors. Due to various government policies the cost of doing business is very high. Production costs are also on the increase.
It is to be hoped that the authorities concerned will analyse key messages coming out of the latest survey about the sentiment of business community and take corrective measures. Confidence is the key factor in the rise of business activities. The authorities should take advantage of heightened confidence among businessmen to put the economy on an even keel.