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Pakistan FDI plunges by 67%

Publication Date : 17-10-2012


Foreign investment is becoming rare commodity for Pakistan while the outflow has been increasing rapidly as was witnessed during the first quarter of the current fiscal year.

The foreign direct investment (FDI) fell by 67 per cent to US$87 million during the July-September of 2012-13 compared to $263 million the same period last year.

The rise in portfolio investment supported the overall Foreign Private Investment (FPI) which fell by 15pc to $183.5 million during the quarter.

However, the FDI outflow from almost all sectors except the oil and gas exploration registered significant increase.

The portfolio investment, which is considered as temporary investment, rose to $96 million in July-Sept period compared to an outflow of $47 million during the same period last year.

Most of the sectors registered an outflow of foreign investment including the extremely popular telecommunications sector. During the first quarter the sector note an inflow of $78.3 million while the outflow was $179.2 million making a net outflow of $100.9 million.

The overall inflow of FDI during the quarter was $286 million while the outflow was $199 million giving a dismal picture of the economy having no attraction for the global investors.

Analysts said the trust deficit among the foreign investors is increasing as the government makes tall claims but fails to deliver.

An exporter of textile products said poor economic performance of the economy during the last five years gave a sense that the economic policymakers were lacking vision to bail the country out from the current mess of failures.

The only attraction for foreign investors is the oil and gas exploration which succeeded to receive an investment of $114 million during the first quarter of this fiscal year.

However, it was less than the $180 million the sector received in the same period last year.

The country is facing energy crisis which offers great opportunity for the investors but the sector could not receive any significant investment. In fact, the sector lost almost all investment as the net investment in the sector was just $0.7 million compared to $14 million it received in the same period last year.

The country is under enormous pressure of falling foreign exchange reserves and speedy payments of debts and interests on debts to the IMF and other donors.

The repayments have slashed the reserves and shaken the exchange rate as the local currency has continuously been losing value against the US dollar.


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