Decline in foreign investment amid crisis


KARACHI: Pakistan suffered a decline in the inflow of foreign direct investment in the first quarter of 2010-11, as 24 major manufacturing sectors received considerably less foreign investment in comparison to the quantum of investment received in the corresponding period of last fiscal year.
Among the sufferers were sectors including food, food packaging, beverages, tobacco, paper, leather, leather products, chemicals, petroleum refining, pharmaceuticals, ceramics, metal products, machinery (other than electrical), transports equipment (automobiles), cars, thermal power generation, trade, hardware development and financial business.
However, sugar, textiles, rubber/rubber products, mining/quarrying, oil/gas exploration, cosmetics, cement, basic metals, consumer/household machinery, construction, transport, telecommunications, information technology and IT services sectors attracted better foreign investment during the said period.
Total inflow of foreign investment in the country aggregated to 455 million dollars in the July-Sept quarter.
Reluctance from investors was evident in the first quarter, as the inflow of Foreign Private Investment (FPI) decreased by a mammoth 67.5 percent. Pakistan has alarmingly received only $67.7 million worth of foreign private investment in July-Sept 2010, as compared to an investment worth $208.2 million during the corresponding period of last fiscal.
The foreign direct investment (FDI), however, reflected a slight decline of 9.5 percent and settled at $387.4 million as against $428 million received in the comparable period of previous fiscal. Total foreign investment in the country amounted to $455 million witnessing a decline of 28 per cent, while investment worth $636 million was received during the same quarter of the last fiscal.
To add to the worries, investment coming from the developed nations declined by 50 percent, as only $244 million flew to Pakistan in the first quarter as compared to $484 million in last year. However, there was growth in the investment from developing countries, as an increase of 185 percent was seen.
The unwillingness of investors to expand business in Pakistan is understandable as the country is currently suffering from major crises like war on terror, political tug of war between the political parties, bomb blasts and floods.