Foreign investors actively engaged in Pakistan have recently presented their proposals for the upcoming 2024-25 budget to the government, aiming to address critical fiscal deficits and enhance the investment climate in the country.
The Overseas Investors Chamber of Commerce and Industry (OICCI), representing these foreign investors, has forwarded a set of recommendations to the government with the intention of curbing the fiscal deficit to 5 percent or less of the GDP and resolving existing issues hindering both local and foreign investment.
In a correspondence addressed to Muhammad Aurangzeb, the newly appointed Finance Minister, Abdul Aleem, the CE/Secretary General of OICCI, commended certain bold decisions made by the interim government preceding them. However, he emphasized the need for further improvement in transformative efforts. The proposals put forward by the OICCI aim to significantly reduce the fiscal deficit, primarily through measures such as initiating privatization and reforms in strategically chosen state-owned enterprises (SOEs) to curb their annual losses, which amount to approximately Rs. 1 trillion. Additionally, the OICCI advocates for enhancing the tax-to-GDP ratio to double digits over the next few years, mirroring the achievements of neighboring economies, along with a substantial increase in the number of taxpayers.
To achieve these objectives, the OICCI emphasizes the importance of strong commitment and tangible action from the authorities, leveraging technology, including AI tools, to broaden the tax base across all sectors of the economy. Furthermore, the OICCI proposes simplifying the Ease of Doing Business, particularly in taxation and regulatory domains, reducing the government’s footprint, and ensuring transparent policy formulation and implementation.
Addressing the issue of over-regulation, the OICCI suggests aligning Pakistan’s regulatory framework with that of similar economies to encourage entrepreneurship and investment. Furthermore, proposals include the digitization of government operations to enhance efficiency and reduce compliance costs, investment in human capital through education and skill development, and resolving tax anomalies and operational challenges that deter both local and foreign investors.
Highlighting their ongoing collaboration with McKinsey & Company, an international management consultancy firm, the OICCI aims to provide valuable insights to improve Pakistan’s investment ecosystem. The results of this collaboration will be shared with the Finance Minister and the Government of Pakistan (GoP) upon finalization.
In a bid to foster dialogue and collaboration, Abdul Aleem extends an invitation to the Finance Minister to engage in an interactive session with leading foreign investors hosted by the OICCI. Such dialogues are envisioned to play a pivotal role in shaping policies conducive to investment and sustainable development.
Expressing confidence in the Finance Minister’s recent acknowledgment of the economy’s key challenges, the OICCI emphasizes the importance of collective support from stakeholders in steering the economy towards growth and prosperity.
With the OICCI being a significant contributor to Pakistan’s economy, responsible for approximately one-third of the total tax revenue and significant foreign investments, it underscores the importance of creating an enabling environment for sustained economic growth and development.