Economy crumbling as political standoff continues


The lingering political standoff between the government and Pakistan Tehreek-e-Insaf (PTI) and Pakistan Awami Tehreek (PAT) protesters in the federal capital has caused the postponement and cancellation of many business meetings scheduled in Pakistan by foreign shareholders, besides keeping foreign investors at bay.

The dollar-hungry Pakistan has already witnessed a slump of 80 percent in the inflows of foreign direct investment (FDI) that, the State Bank said, declined to $24 million in July – the first month of Fiscal Year (FY) 2015-2016. In July 2013, the FDI was $119 million.

Analysts believe that the slump could further shatter the confidence of the risk-averse foreign investors whose direct investment in neighboring India amounted to a whooping $28 billion in 2013.

A recent survey conducted by Overseas Investors Chamber of Commerce and Industry (OICCI) during the first week of the current month has revealed that the investors’ confidence for attracting new FDI has been dented by the political impasse.

OICCI is the collective voice of 195 major foreign investors in Pakistan from 35 different countries, operating in 14 different sectors of local economy.

Based on the feedback by OICCI’s members, the survey states that after the terror attack on Karachi Airport in June, the political deadlock in Islamabad has negatively impacted ongoing business activities and future investment plans.

“The recent events have caused the postponement or cancellation of scheduled business meetings in Pakistan with overseas shareholders and regional management,” said more than half of those surveyed.

The survey further revealed that about a third of the respondents expected a fresh review of their planned new investment for the next three years.

About half of the respondents expressed the opinion that such incidents affected their ability to retain critical talent in Pakistan.

In terms of its immediate impact on the ongoing business operations and product distribution, 40 percent of the respondent expected decline in sales and profitability with resultant reduction in tax payments.

A majority, 62 percent, foresaw serious damage to the government’s fiscal targets while a small minority suggested that this might also impact on the recently launched Vision 2025 targets.


“We expect that the current uncertainty in the business environment would soon be stabilised and that the authorities, both at the federal and provincial level, would continue to address the key issues affecting business and investment,” said President OICCI Asad S Jafar while commenting on the survey’s findings.

The key issues, the president outlined, include security, law and order, energy supply gap, serious concern on governance and policy implementations and need for a structured accountability on business and investment issues in line with Vision 2025.

Reiterating OICCI faith in Pakistan, Jafar said that brief surveys like the one in question were not exhaustive but meant to reflect an immediate assessment of the foreign investors of the current events in Pakistan.

Analysts believe that the slump in FDI shows that the federal government has failed to improve the country’s image and convince offshore investors despite the availability of bulk of unused liquidity in the international market.


  1. A colossal damage to the economy and the wellbeing of Pakistanis is being done by Nawaz Sharif refusal to move aside even temporarily to allow a proper investigation into the controversial last elections. Justice being seen to be done and all norms of democratic processes are being denied. Illegality and dishonouring the laws by our rulers must be brought to an end once for all. Our business community's support for Imran Khan therefor must be the right thing to do so that in Pakistan "rule of law" is firmly established

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