Pakistan is facing severe foreign exchange crisis.
Islamabad:
According to Asian Light International report, despite the current forex crisis, companies entering Pakistan are troubled by the uncertain policies of the government and the State Bank of Pakistan.
One of the major issues hindering the smooth functioning of MNCs in the current environment relates to the SBP’s approach towards the ongoing foreign exchange crisis.
Its standard response to most problems has been strict controls on the movement of foreign currency out of the country. Asian Light International pointed out that the ban is posing a challenge for these companies in conducting their regular operations.
During the last few months, several MNCs have expressed their frustration over the institutional barriers affecting their businesses. Chief among them is the excessive foreign exchange control followed by Pakistan.
The seriousness of the problem can be gauged from the fact that some highly reputed global companies are looking to shut down their operations in the country, reports Asian Light International.
Many multinational companies such as Siemens, Procter & Gamble, Oracle Services Pakistan, IBM Pakistan, FedEx (Jerry Group of Companies), Marriott Hotels, Troy Group Inc. 3M Pakistan is considering to shift to other countries.
Siemens Pakistan is a leading technology company serving various industries, contributing to the overall growth and development of Pakistan’s economy. However, the hostile attitude of the Pak government and SBP is forcing the company to reconsider its future in the country. According to a report by Asian Light International, according to some company insiders, the group is actively considering shutting down its operations/facilities in Pakistan.
Siemens, which is facing severe forex crunch, is believed to have been pushed to the brink by the SBP, which continues to block an amount of USD 205 million for several months.
Other multinational companies face the problem of importing raw materials and machinery into Pakistan, clearing their shipments, and repatriating their profits from Pakistan.
The economic turmoil in Pakistan has pushed the country towards a crisis that is immense in nature and duration. According to Asian Light International report, the combination of low growth, high debt, unprecedented inflation and dire shortage of foreign exchange has made the future of common people in the country uncertain.
Constraints such as political instability, corruption, macroeconomic policy inconsistencies, security concerns and energy shortages etc. have traditionally kept foreign investors away from the country.
Business environment problems are the result of factors including red tape, bureaucratic slowness and corruption, reports Asian Light International.
In addition, a gradual deterioration in Pakistan’s business climate is causing stagnation in inward investment.
While part of this can be blamed on the economic situation, the impact of the mistreatment of investee companies cannot be ignored, reports Asian Light International.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)