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Overseas Investors' Chamber of Commerce: an interview with its secretary general, Mr. Zahid Zaheer.

Economic Review: When was Overseas Investors' Chambers of Commerce was (OICC) formed?

Zahid Zaheer: OICC was formed in Karachi in 1860, when Karachi was a part of Bombay province, mainly to help promote cotton export. Basically it was a merchant's chamber. Volkart Brothers, the founding members, are still members of OICC. Denso Hall and Clayton were the members of the chamber as well. Initially the chamber was named "The Karachi Chamber of Commerce". The membership was open to anyone who could invest over 50 per cent in foreign currency investment. In 1968 the Karachi Chamber of Commerce was renamed as OICC. In 1991 the criteria for membership was reshaped to accommodate more investors and instead of 50%, 20-50% foreign investment was needed for membership.

ER: What are the objectives of OICC?

ZZ: The main function of OICC is to protect and promote the interests of foreign investors in Pakistan and to elaborate the implications of Government's financial or economic policies to the members of OICC. For this purpose, Seminars are being held regularly.

ER: How many members are there in OICC?

ZZ: There are 151 members: 49 from UK, 35 from USA, 30 from various European countries, 10 from Japan and the rest from other countries.

ER: What is the investment activity of OICC?

ZZ: There are 69 multi-national companies in the Industrial sector, 40 in service and Trading including shipping, 22 Banking companies and 7 Insurance Companies. 2 ER: What is the size of OICC Investment?

ZZ: Since the inception of Pakistan approximately Rs. 40 billion has been invested in the country and 25 per cent of which (Rs. 10 billion) was invested through OICC.

ER: What's the contribution of OICC towards the payment of tax to the Government?

ZZ: The members of OICC contribute one-sixth of the total tax received by the Government. In addition their share in the GDP of the manufacturing sector is 20 per cent.

ER: What is the impact of government policies on the functioning of OICC?

ZZ: We are much satisfied with Prime Minister Nawaz Sharif's economic reforms though several, revenue measures in the last budget were not encouraging and sent wrong signals to the investors. Withdrawal of 15 per cent Balancing, Modernization and Replacement incentive was one such example. Another was the introduction of Turn-over Tax. This is the tax which is being calculated on sales, not on profits. Furthermore, this tax has also been implied on the companies which were already on tax-holiday. Such measures compounded by red-tapism are causing uncertainty and chaos for investors.

ER: What are your recommendations?

ZZ: Foreign Investment Protection Act, which limits the foreign investors to invest only in Government approved projects should be kept open for all project and same should be applied on the repatriation of funds. The 6 per cent import licence fee should be refundable or it should be allowed reutilization on next licence, if the first one does not go through. Over-protective labour policies are hampering productivity, this matter should also be looked into. Pharmaceutical companies are under pressure because of Price Control although the costs of other commodities have escalated considerably over the years. Consequently the cost-profit margin has been squeezed to the limit. Because of the ill-conceived fiscal policies the annual foreign investment in the country declined to 2 per cent, which is not a healthy sign.

ER: What is the Administrative and financial set-up of OICC?

ZZ: The affairs of OICC are governed by the Management Committee which is headed by President, the other office-bearers include Vice President, Secretary General and other members. All of them are elected except Secretary General, for one year. President and Vice President can not hold office for three consecutive years. They are to stay out of office for a term and then can be re-elected. Staff consists of twenty-five with the Secretary General as the Chief Executive of OICC. The expenses of OICC are met through the annual membership fee, publications, rent of the building and other activities. Since OICC, basically, is a non-profitable organization, the revenue generated in this way facilitates its budget of 55 lacs which is incurred on salaries, building maintenance and repairs, travel expenses and various other administrative costs.
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Author:Aslam, Syed M.
Publication:Economic Review
Article Type:Cover Story
Date:Nov 1, 1992
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