SBP eyes outward FDI


Governor State Bank of Pakistan Yaseen Anwar Thursday said Pakistan’s economy should now move away from a persisting fascination with inward Foreign Direct Investment (FDI) as a metric of the country’s economic health.
The economy, the governor said, should now, at least, give attention to the Outward Foreign Direct Investment (OFDI). This he said at the 4th CEO Summit and book launching of “100 Business Leaders of Pakistan” held here at a local hotel. Anwar pointed out that FDI was investment in tangible assets in the real sector. “That means that money and capital flows through FDI are not very volatile. And it is the volatility in such flows that keeps any central banker awake at night,” said he. The governor also stressed the need for developing and implementing good governance practices to stimulate economic growth in the country.
He said good corporate governance regimes cannot be underscored more as they create an attractive investment climate necessary to maintain investors’ confidence, resulting in positive impact on the share price and creating possibilities for raising low cost capital.
Leaders must be visionary to see the future trends, anticipate institutional bottlenecks, remain competitive and be able to adapt rapidly to changes, he said and added that leaders need also to take into account their corporate social responsibility so that profit seeking is balanced against the objective of social service and well being of society. Anwar observed that Pakistan’s corporate sector has survived in perhaps one of the most challenging environments and yet it has flourished. “There are challenges to expanding abroad – challenges that our companies may not have encountered previously. But I, for one, would like to see more of our corporate sector aggressively targeting the regional and global market. I challenge you to dream larger than ever before,” he added.
Anwar noted that the millions of Pakistanis abroad will give you an edge as you venture abroad. “They will be familiar with your brands, and with the quality of your products. They may just hold the key to giving you a foothold in international markets,” he added. He observed that the world today is passing through a turbulent phase that requires a realignment of our leadership approach to managing businesses. “Today’s business leader is faced with a multitude of challenges, both on external and internal fronts. The complexities arising in the eco-system of any business may arise in the shape of macro economic imbalances that include sagging demand, inflation, volatility in financial markets, etc.,” he said.
The Governor said: “The most significant lesson that we have learnt from recent events is the importance of fundamentals in risk management. For instance, there is a basic rule since inception of banks which says “do not put all your eggs in one basket. Had this simple rule been followed, many institutions could have avoided huge losses”.
Anwar cautioned that elevating corporate governance should not be confined to banks, but commercial concerns must also do the same. “We all know the pace of globalization has accelerated, resulting in increased domestic and global economic integration,” he added.
“The current breed of Pakistani CEOs is the street-smart entrepreneur, who will learn to adapt to any environment. That is going to be our competitive advantage in the global market,” he noted.
“Twenty years from now, I would like to hear the story of how a Pakistani corporation entered the global market, the challenges it faced and overcame, and became the first Pakistani company to be consistently featured in the Fortune Global 500 list of companies,” Anwar concluded.


  1. The general experience is that firms first succeed at home, then at exports, and later go on to invest overseas. Also, the experience of East Asia is that inward foreign direct investment (FDI) can help domestic firms rise in this hierarchy of moving from the domestic market to the export market and into foreign markets. The implications for Pakistan are twofold: improve the domestic investment environment (e.g., power situation), and attract export-oriented FDI. Such policies would also deter hurtful outward FDI in the form of Pakistani investors relocating to more attractive economies.

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