Sunday, May 18, 2008
By Israr Khan

ISLAMABAD: Due to political turbulence and prevailing judicial crisis, Foreign Direct Investment (FDI) in Pakistan during July-April 2007-08 dipped by 16.7 per cent year-on-year to $3.48 billion and portfolio investment by 93.3 per cent to $119.4 million as compared to the corresponding period of the previous fiscal year.

Economic pundits believe that Pakistan was a destination for good investments where the profit ratio was very high compared to other countries of the region.

However, free judiciary is key to attracting investment and at present investment is declining. However, it can be increased if the government manages to reinstate the deposed judges and give way to a free judiciary. As a result, foreign investment inflows may accelerate to a reasonable level.

An official of the Board of Investment (BoI) told The News that at present, various countries and business tycoons are keen to invest in Pakistan but they are hesitant because of the political turbulence and prevailing judicial crisis.

According to the State Bank of Pakistan (SBP) figures, during July-April 2007-08, private FDI (with privatisation) in absolute terns dipped by $699 million and portfolio investment by $998.4 million over the corresponding period of the last fiscal, when these stood at $4.18 billion and $1.09 billion respectively.

Foreign public portfolio investment also declined by 96.9 per cent to $20.5 million against $671.4 million recorded in the corresponding period of the last fiscal.

On balance, total foreign investment (private and public) in 10 months down by 39.5 per cent to $3.60 billion from $5.95 billion in the corresponding period of the last fiscal.

According to the investment break-up by the region developed countries’ investment in Pakistan declined by 29.4 per cent to $2.46 billion (including FDI $2.13 billion and portfolio investment of $331.8 million). Developing economies investment declined by 42.8 per cent to $834 million (FDI $1.07 billion while it withdrew $239 million portfolio investment).

Among developed countries, Western Europe made a total investment (FDI and portfolio) of $631.6 million and European Union, $414.7 million while in the corresponding period of the last fiscal, western unit invested $2 billion and EU $1.91 billion.

Besides, under unspecified head (investment by IFIs and other NSEs) declined by 14.7 per cent to $283.5 million.

Among developing economies, Caribbean Islands investment declined by 83.2 per cent to $3.1 million against $18.3 million recorded in the correspondent period. However, Africa, including Libya, Egypt, Mauritius, South Africa and other African countries’ investment was up by 67.9 per cent to $137.4 million.

Asian countries (West Asia, South, East and South East Asia) investment in Pakistan was down by 45.7 per cent to $736.6 million against $1.35 billion in the correspondent period of the last fiscal.


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