The net inflow of foreign investment into Pakistan shrank significantly by 58 per cent during first four months of current financial year. Central bank reported that foreign investors invested only $238 million during July-October FY12 against $571.8 million of corresponding period last year. Review period saw investment from foreign private and public sectors contracting, respectively, to $239.4 million and $1.3 million from previous year’s $610.5 million and $38.7 million, State Bank said. This depicts an absolute decrease of 60.8 per cent or $371 million in foreign private investment and 96.6 per cent or $37.4 million in foreign public investment over same months in FY11. Of the total private investment, Foreign Direct Investment (FDI) depleted by 28 per cent to $340.2 million compared to $470.5 million of the same period last year. FDI, against privatisation proceeds, remained zero thus unreported by central bank.
While portfolio investment at country’s stocks market showed an absolute slump of $240.8 million to stand at minus $100.8 million compared to $140 million of FY11. Portfolio investment from the public sector also remained downward at minus $1.3 million, down 96.6 per cent when compared to last year’s minus $38.7 million. Foreign investment against debt securities, showing the net sale or purchase of special US$ bonds, Eurobonds, FEBC, DBC, treasury bills and Pakistan Investment Bonds, was no exception. It came down by $37.4 million to minus $1.3 million against minus $39 million of July-Oct FY11. A region wise analysis of SBP’s investment data reveal that investment from developed nations of Europe and North American regions, decreased more sharply, by 90 per cent, to $36.4 million compared to previous $354.9 million. Investment from Western Europe shrank to negative $168.6 million against positive $140.6 million. While from North America it reduced to $174.4 million from $ 195.3 million.
From United States – Pakistan’s largest source of FDI – the investment went down by 10.5 per cent to $174 million compared to $ 194.7 million of FY11. Tsunami-hit Japan, however, stood as an exception with investment from the Far Eastern industrial giant showing 92 per cent increase to $2.5 million against the previous $1.3 million. The investors from developing economies of Afro-Asian regions seemed less wary of risky investment climate in the terrorism hit Pakistan, as investment from South registered a nominal decrease of 9.8 per cent. The direct and portfolio investment from developing nations slid to $204 million compared to $226 million previously, SBP reported.
Whereas investment from African countries inched up by 34 per cent to $22 million, Asian investors appeared to be risk-averse and invested 16.6 per cent less, $160.7 million, compared to $192.7 million previously. Analysts termed the ongoing downward trend in foreign investment as critical for the resource constrained country saying dollar inflow was the only permanent factor that could rid Pakistan of its balance of payment woes. Exacerbated by ongoing diplomatic cold war between Washington and Islamabad, investment climate in the terror stricken country has not been conducive for a considerably time. This is due to a deteriorating law and order situation and ever-present political instability.
