Western investment declines by 46 percent

KARACHI: While the strategic allies of Pakistan, particularly the United States, push Islamabad to do more in the “war on terror”; they are lagging far behind their counterparts from the developing world in their commitment to Pakistan, particularly in terms of investment.
The State Bank of Pakistan’s statistics on “Inflow of Foreign Investment in Pakistan by Geographical Origin” reveals that during July-October of FY2010-11, net foreign investment had dipped to $569 million compared to $884.9 million last year, posting a decline of 35.7 percent or $ 315.9 million, apparently for the oft-repeated reason of politico-economic instability in the country.
According to the central bank, during the said period the foreign direct investment (FDI) and portfolio investment had, decreased by 21.6 and 64.9 percent, respectively, to $ 467.7 million and $101.3 million compared to $596.4 million and $288.5 million during the last corresponding period.
What is worth noticing here is the fact that the foreign investment in Pakistan on the part of the developed world, which are more demanding on the strategic front, is shrinking. On the contrary, investors from the developing countries of Asia, Middle East and Africa have invested relatively more than their counterparts in the developed world as shown in the SBP figures.
The State Bank, for the said period, has calculated the net foreign investment from the developed countries at $ 348.7 million, compared to the $ 642.8 million of the last corresponding period. The statistics point at, indeed, an alarming slump of $ 294.1 million or 45.7 percent in investment from the developed world.
The US government, Pakistan’s ally in the war against terrorism, seems to have failed in convincing the American investors to extend a helping hand, through investment, to the poverty-stricken country. According to SBP, the direct and portfolio investments from the US have exhibited a noticeable dip of 39.8 percent or $ 129.7 million during the period under review. Pakistan’s friends in Washington, World Bank, the IMF, Asian Development Bank (ADB) and elsewhere, however, tend to burden the poverty-stricken people of Pakistan with more foreign debts which have now crossed the $ 55 billion mark.
Other developed countries like Japan and Australia have been less than generous; their contribution to net investment in Pakistan has declined by 95 and 80 percent respectively, to $0.2 million and $3.2 million against the previous figures of $5.9 and $16.4 million. France was an exception, showing 61.7 percent growth in investments now totaling $2.7 million investment. Western Europe invested $129.5 million during July-Oct 2010-11, some $133.4 million or 50.7 percent less than last year.
The global recession and prevailing uncertainties over Pakistan’s economic condition are regarded as the prime reasons in the cooling of interest of investors from the developed world. But the degree, to which investments have dried up, shows how lacking the commitment of Washington, London, Tokyo and other power centers is.
However, perhaps unwary of the international downturn or instability in Pakistan, investors from the developing world have made a net investment of $229.5 million in Pakistan during the same period. According to SBP, the developing economies invested 199.8 percent or $153 million more money than they had invested ($76.5 million) during the same period in FY2009-10.
The increase in net investment from developing and oil-rich economies like China, Saudi Arabia, Kuwait, Iran, Egypt, Mauritius, South Africa, Qatar, Turkey, UAE, Hong Kong and Malaysia ranged from 158.9 to 172.4 percent.