Low FDI adding to woes

Published December 18, 2013
- File Photo
- File Photo
- File Photo
- File Photo

KARACHI: The Nawaz government failed to lure foreign investors during its first five months as meagre inflows provided little relief to foreign exchange reserves and exchange rate regime.

The State Bank on Tuesday reported that foreign private investment fell by 28 per cent during July-November to $330 million compared to $460m last year.

However, foreign direct investment during the same period slightly improved by 4pc to $330m.

Last year it was $315m.

The situation was more dismal in portfolio investment which was just $0.6m during the five months while it was $144m in the corresponding period of last year.

An analysis of inflows and outflows during this period shows that only few countries showed confidence in Pakistan while most preferred withdrawal of their investment.

More than 90pc foreign direct investment came from the US and European countries with the exception of Hong Kong and Oman.

The net direct investment of China in Pakistan was negative $5.3m which means greater outflows than inflows.

It invested $8m and withdrew $14.3m during this period.

It seems the new government has so far failed to attract Chinese investment, though China is among major foreign investors in the world and a close friend of Pakistan.

Switzerland appeared as biggest foreign investor with $109m followed by US with $96m, Hong Kong $$73m, Italy $50m, UK $46m, France $27m, Austria $26m and Oman $35m.

The State Bank reported that during the five months, country received $767m FDI while outflow during the same time span was $436m.

Both inflows and outflows were lower than last year.

Highest outflows were noted from Norway ($97m) followed by UAE ($77m), Saudi Arabia ($32m) and Qatar ($24m).

The low FDI showed that the country could not improve its image hit by terrorism and poor law and order situation while energy crisis remained a permanent foe to economic development.

The new government promised to resolve the energy crisis, but could not bring investment in this sector.

Economists believe that foreign investment would not land unless domestic investment improves.

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