EDITORIAL: No poll tells it better about how a particular country or government is performing than the verdict of the market, especially what the revered and celebrated foreign investors have to say about things. That is why the Overseas Investors Chamber of Commerce and Industry's (OICCI's) Annual Security Survey 2020 brings some very welcome news indeed. The report that is based on feedback regarding the country's security situation for the last year - one of the main determinants of foreign investment, especially hot money - says foreign investors expressed a "high level of satisfaction" regarding Pakistan's "fast improving security environment" especially in the main economic hubs of Karachi and Lahore. In fact, the respective profiles of the two cities seem to have improved so much that investor money now finds it just as reliable as other mega cities of the region. It turns out that the recent handling of the attack on the Pakistan Stock Exchange (PSX), when law enforcement agencies (LEAs) were able to restore order in a matter of minutes and the trading floor never stopped operating, only confirmed the opinion of most foreign investors that Pakistan has its security situation sorted out.
That explains why they did not mind the odd hiccup on the way like the disruption from the so-called Azadi March in December 2019, the border tension with India during the fall and winter of last year, or even all the problems brought about by the coronavirus pandemic. Before Covid-19 complications, OICCI data shows that the number of foreign nationals visiting Pakistan for business matters relating to the Chamber's members recorded a very healthy increase, and more than 40 percent respondents apparently reported more overseas visitors than last year. 26 percent hosted more than 50 visitors and most parties got more between 20 and 50 visitors, which says a lot about how relevant authorities have sanitised the security environment. That is especially so since the respondents included CEOs and senior management officials of member organisations who belong to 35 countries and also operate in 14 key sectors of Pakistan's economy. The decisions of most of these people make and break markets, and the conventional wisdom is that they usually know what they are doing, which gives Pakistan a small reason to celebrate in the midst of all the doom and gloom that the pandemic has triggered. OICCI has also pointed out, quite rightly, that this year's step forward was over and above the already improved security environment of last year, and indeed the continuous improvement recorded in the Annual Security Survey since 2015.
It is quite remarkable how Pakistani authorities have managed to turn things around in the last half decade. Before 2015, the country had effectively descended into a highly chaotic situation in terms of law and order, and the military finally lashed out after terrorist incidents over many years had claimed more than 50,000 lives. That very quickly delivered the kiss of death to foreign investment and also sent the economy into a tailspin. That the economy was able to survive such immense loss of confidence is a great testament to the will and forbearance of the Pakistani nation, especially its security agencies. Now there is every reason to expect increased investment inflows down the road. The one thing foreign investors despise even more than bad news is uncertainty, and since now they have factored in the certainty of Pakistan's much improved security environment, it seems that a healthy dose of foreign exchange into the country can be expected as the world eases out of the restrictions induced by the coronavirus. That's about as good a bit of news as can be expected under the circumstances, since foreign investment would not only lift some pressure off national income and employment but also buoy the equity market. All that Islamabad now needs to do is make sure that this feel-good environment is protected at all costs, because there is still enough toxicity in the system for investors to make a beeline for the exit lounge.
After all the problems that the PTI (Pakistan Tehreek-e-Insaf) government faced in its early days, the sudden collapse in GDP (Gross Domestic Product) and even how much bigger the mountain of debt we are buried under has become, the news about improved foreign investor confidence because of the security situation is finally something to write home about.
Copyright Business Recorder, 2020
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