Net foreign investment dips by 19 percent in five months
RECORDER REPORT
KARACHI (December 27 2007): Net foreign investment has further declined by 19 percent during the first five months of the current fiscal year, mainly due to political uncertainty and law and order situation in the country for the last eight months.

The State Bank of Pakistan (SBP) statistics on Wednesday revealed that the direct foreign investment (FDI) was increased by 15.7 percent, but the portfolio investment was declined by 86.3 percent. Due to the huge decline in the portfolio investment, net foreign investment showed a decline of 19.3 percent to 1.818 billion dollars during the first five months of the current fiscal year.

Net foreign investment during the same period of last fiscal was stood at 2.252 billion dollars, which showed a decline of 433 million dollars during July-November of the 2008 fiscal.

However, some analyst said that despite political uncertainty, confidence of foreign investors, who invested some 1.81 billion dollars during the last five months, indicated that they were optimistic about Pakistan's economy.

The SBP statistics showed that during the first five months of 2008 fiscal year, the FDI had increased by 433 million dollars to 1.712 billion dollars as compared to 1.48 billion dollars during the same period of last fiscal.

However, portfolio investment has dipped by 86 percent or 666 million dollars to 106 million dollars during the July-November as against 772 million dollars during the corresponding period of last fiscal. After a long gap, the foreign investment showed a downward trend, as the foreign investors were reluctant to invest in the stock market.

As a result, the portfolio inflows had been declined by 86 percent during the last few months, said Muzammil Aslam, an economist. He said that foreign investment statistics were very encouraging and without any huge privatisation transaction, it had reached 1.71 billion dollars, he said.

Despite the political battle, foreign investors were investing in the Pakistan, which showed that the country's economic fundamentals were strong and had the ability to attract foreign investors despite the last few months' uncertainty, he added. He said that it was expected that after the general election, investors would again focus on Pakistan and investment would boost in the future.

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