Pakistan: Slump in foreign investment

[ice_man]

The country is going down the toilet on so many fronts, one has to look at all the various economic indicators. FDI has been an issue, but how can you tackle it when the environment in which you operate is not conducive to business?

Lack of electricity and gas, corruption, the spectre of default, a mismanaged economy, lack of leadership, weak governance, law and order instability - so many factors and more hinder the prospect of investment.

All the while the government cooks up ideas like printing more currency, and lavish expenditure continues etc. The country isn't positioned well for FDI. We're a begging bowl of a nation, and as somebozo mentioned, as a Pakistani I personally wouldn't invest in Pakistan, so how can we expect FDI?

It hasn't dawned on many just how bad the economic situation is, all because of the 4.5 years of this government. It's time to cash your cheques and run, the country is a mess.
I've given up hope with the PPP in charge, I'm sure others have as well.

and i guess the bold part is what you have actually done haven't u???? and it has dawned on you pretty late! i would recommend stay & wait it out another 6 months for elections & things will improve.

clearly you have no idea about the increase in remittance in pakistan which debunks your theory about "FOREIGN PAKISTANIS NOT INVESTING IN PAKISTAN".

and as for country going down the toilet i am sure you don't need to look further than GREECE,SPAIN etc to see that situation in europe is not any better.

so YES pakistan is in a mess but then again future seems bright in just less than a year when this government will surely go!

 

[RiazHaq]

foreign investment is Pakistan is peanuts....wont matter if all goes away...
Specially if the big multinationals go away,that will be better for local companies..will make space for them...

FDI in Pakistan was $5.4 billion in 2007-2008. Rising FDI during Musharraf years helped create over 2 million jobs a year, boosted economic growth & reduced poverty.

Haq's Musings: Pakistan's Economic Performance 2008-2010

 

[Zeeshan360]

That slump after Musharaff regime is astonishing

Hope Pakistanis vote for Imran Khan

 

[illusion8]

China time and again announces multi billion dollar investments in Pakistan, what's happening on that front?

 

[DGMO]

and i guess the bold part is what you have actually done haven't u???? and it has dawned on you pretty late! i would recommend stay & wait it out another 6 months for elections & things will improve.

clearly you have no idea about the increase in remittance in pakistan which debunks your theory about "FOREIGN PAKISTANIS NOT INVESTING IN PAKISTAN".

and as for country going down the toilet i am sure you don't need to look further than GREECE,SPAIN etc to see that situation in europe is not any better.

so YES pakistan is in a mess but then again future seems bright in just less than a year when this government will surely go!

I've more or less done that, and will continue to boycott the country until this government of thieves decides to stop looting the country. It's my personal protest, and I hope others follow.

I haven't said foreign Pakistani's aren't investing, they may be, but the appetite to invest during Musharraf's tenure was far greater than it is now. What I have seen is a number of Pakistani's here in the UK that I know pull out of deals, or stop visiting Pakistan like they used to on an annual basis. Why go to Pakistan to be met with 8-10 hour loadshedding?

The poverty in Pakistan and other problems are incomparable to Greece and Spain. Ask the Pakistani's in Athens or Barcelona whether they wish to go back to Pakistan, I know what they'll say.

Your optimism is to be admired, but there is nothing to suggest that the future is bright. We're bankrupt, running back to the IMF, bending over to the US for aid.

This government won't be losing power anytime soon, not until the people rise. The tsnuami that was promised by IK is now a gentle beach wave, where did that go? The coalition is too broad, and too strong to be broken with the wadere at the top. We're stuck with the thieves and the downward slope will continue - as sad as that is.

 

[CrazyTycoon]

and i guess the bold part is what you have actually done haven't u???? and it has dawned on you pretty late! i would recommend stay & wait it out another 6 months for elections & things will improve.

clearly you have no idea about the increase in remittance in pakistan which debunks your theory about "FOREIGN PAKISTANIS NOT INVESTING IN PAKISTAN".

and as for country going down the toilet i am sure you don't need to look further than GREECE,SPAIN etc to see that situation in europe is not any better.

so YES pakistan is in a mess but then again future seems bright in just less than a year when this government will surely go!

The problem is that you don't know what you're talking about.

Remittances is not 'investment', it's simply money earn't abroad and sent back home to family members. There is no investment. You might think that increasing remittances is a good thing but large sums of remittances come with their host of problems. For most of the part, remittances is a short term benefit and perhaps a long term disadvantage. Most money sent back home by Pakistanis here in the UK was sent in order to provide income for family members or to build lavish houses back home. All this while Pakistanis who came to this country got tough labour jobs that paid less than the average British wage while also supporting family here in the UK.

This resulted in these Pakistanis's kids lagging behind in the UK due to less spending power by their Pakistani dads (due to their selfishness of sending too much back home) with standards of living at the lowest of the barrel while their Indian counterparts rather saw it fit to invest their hard earn't money in businesses in the UK which was much cheaper at the time and the result is their kids having a high standard of living as well as good businesses to provide them with income or to fall back on in times of recession (i.e. when there are few decent jobs).

Then there's the issue of laziness that comes with this. Relatives back home think it's better not to take a low paying job when they can simply receive foreign money from the breadwinner in the UK or North America. This is relatively common with Pakistani mothers, fathers and sisters who sleep 12 hours a day doing nothing while the son sends back money every week or so after a tough weeks worth of labour money.

There are more problems relevant to large scale remittances but thats enough for now. It generally wouldn't be a problem if it was happening on a small scale but there are Pakistani families on every street in Britain who have suffered from this and remittances constitute 5%(!) of Pakistan's GDP which shows Pakistan's dependance on remittances and it's increasing every year.

 

[CrazyTycoon]

Now on to the issue of FDI

FDI is vital to any emerging economy and poor country. Why?

1. Because the main thing a country needs to get out of large scale poverty is a build up of it's capital. A country only gets rich if it builds up it's capital over decades like China, India and Turkey have done and will continue to do so for many more decades until their economies will be comparable with the likes of the western world. FDI provides large scale capital over a short period of time in poor countries as these foreign firms can do so thanks to economies of scale and a large amount of resources as well as the skill and brains required. Hence FDI is a quick way of industrialising (which was evident in the Pakistan of the 50s, 60s and early 70s, thanks to the large head start by the British especially in Karachi, Lahore, Peshawar and smaller towns such is Muree).

2. Its brings jobs, skills and training of a high standard from abroad - vital for long term growth unlike remittances which brings nothing in comparison and is only a short term solution.

3. Creates an addition to the local circular flow of income, create a local multiplier effect, greater export lead growth (of which Pakistan experiences a large net loss). This form of industrialisation is more effective than local investment.

4. FDI brings western technology and more effective training which can be passed on to future generations. Workers employed by foreign firms have the upper hand when it comes to setting up a business due to greater skills which leaves a positive outlook for the future in terms of economic growth.

Thats not to say, FDI has it's disadvantages such as exploiting workers and using up non-renewable resources on a greater scale but regulations from a reliable governing body should reduce this, and regardless, the benefits of FDI almost always outweigh the costs.

Lol at those that think it would be best for Pakistan to get rid of it's FDI. By saying so, you indirectly support Pakistan digging itself in a deeper recession. Any FDI that a poor country receives is a blessing. However security issues, corruption and load-shedding ensures that FDI remains at a minimum in Pakistan and this is a great shame considering the cheap labour lying around and the growing middle class.

 

[karan.1970]

Also given the recent news of Pakistan's GDP being actually 10% lower than what is published (the double counting issue), its quite possible that the figures from Musharraf's time are actually nothing but cooked up numbers...

 

[SMC]

^ Still hanging by threads, are we? A piece reported by one news source which has never been mentioned again. Good god, you guys are so desperate to believe anything against Pakistan.

 

[WAQAS119]

Also given the recent news of Pakistan's GDP being actually 10% lower than what is published (the double counting issue), its quite possible that the figures from Musharraf's time are actually nothing but cooked up numbers...

This is a fact. All governments do that. India do that, everyone do that. Always discount government's figures by 10%-20%, you will get true picture.

^ Still hanging by threads, are we? A piece reported by one news source which has never been mentioned again. Good god, you guys are so desperate to believe anything against Pakistan.

Let Karan kiddo be happy posting Pakistan blah blah articles.

 

[ice_man]

The problem is that you don't know what you're talking about.

Remittances is not 'investment', it's simply money earn't abroad and sent back home to family members. There is no investment. You might think that increasing remittances is a good thing but large sums of remittances come with their host of problems. For most of the part, remittances is a short term benefit and perhaps a long term disadvantage. Most money sent back home by Pakistanis here in the UK was sent in order to provide income for family members or to build lavish houses back home. All this while Pakistanis who came to this country got tough labour jobs that paid less than the average British wage while also supporting family here in the UK.

This resulted in these Pakistanis's kids lagging behind in the UK due to less spending power by their Pakistani dads (due to their selfishness of sending too much back home) with standards of living at the lowest of the barrel while their Indian counterparts rather saw it fit to invest their hard earn't money in businesses in the UK which was much cheaper at the time and the result is their kids having a high standard of living as well as good businesses to provide them with income or to fall back on in times of recession (i.e. when there are few decent jobs).
Then there's the issue of laziness that comes with this. Relatives back home think it's better not to take a low paying job when they can simply receive foreign money from the breadwinner in the UK or North America. This is relatively common with Pakistani mothers, fathers and sisters who sleep 12 hours a day doing nothing while the son sends back money every week or so after a tough weeks worth of labour money.

There are more problems relevant to large scale remittances but thats enough for now. It generally wouldn't be a problem if it was happening on a small scale but there are Pakistani families on every street in Britain who have suffered from this and remittances constitute 5%(!) of Pakistan's GDP which shows Pakistan's dependance on remittances and it's increasing every year.

see the fact about kids being lazy & people "back home" being lazy is a personal choice it has nothing to do with remittances being bad! in many a case remittances have inspired kids to study & made them doctors & engineers which they wouldn't have been if there "bread winner" lived in pakistan.

remittances uplift the living standard of the common man so its definetly a PLUS in the current account surplus.

FDI in Pakistan was $5.4 billion in 2007-2008. Rising FDI during Musharraf years helped create over 2 million jobs a year, boosted economic growth & reduced poverty.

Haq's Musings: Pakistan's Economic Performance 2008-2010

2 million jobs i totally agree however in what sector? JUST ONE SECTOR TELECOMMUNICATION! we never saw refineries being set up or silicon valleys being set up! or clothing manufacturing plants being set up!


all we saw was licenses were given to TELECOMMUNICATION GIANTS. which ofcourse over almost a decade were bound to stabalize & eventually get lowered. telecommunication took the whole world by storm this decade not only in pakistan. hell i remember in 2000 having a NOKIA 3310 was a big big big deal. now IPHONES & SAMSUNGS are common among the youth all over gthe world!

 

[rubyjackass]

Foreign investment

some stats here....
I have to repeat my comment......
Its peanuts

Well it is peanuts NOW, as the article correctly says. At one point(2007-08), according to your own stats, investment inflows were >$5bil . This is a huge amount in a GDP of $170bil. Also considering that mostly foreign investment in countries like ours is allowed only in sectors like technology where there is no local participation, this IS a great deal even if it $0.5bil because it will give rise to more industries. It is not entirely true that Pakistan's market is huge and has to be an incentive for outsiders and there is none for Pakistanis. If it is such a low hanging fruit, then wouldn't we be seeing much much more money coming in? It doesn't because, our governments have some nice protective measures(the red tape does half the job) for local industry whereas we allow investments in areas where there is need for some seeds to be thrown.

 

[karan.1970]

^ Still hanging by threads, are we? A piece reported by one news source which has never been mentioned again. Good god, you guys are so desperate to believe anything against Pakistan.

Dont act again like a naive babe in the woods.. Roybot did correct you here too

http://www.defence.pk/forums/econom...ing-gdp-overestimated-may-slashed-10-a-3.html

This is a fact. All governments do that. India do that, everyone do that. Always discount government's figures by 10%-20%, you will get true picture.



Let Karan kiddo be happy posting Pakistan blah blah articles.

 

[SMC]

Dont act again like a naive babe in the woods.. Roybot did correct you here too

I didn't bother responding to that guy because he's an ultimate airhead who won't understand basic sh*t. Read the article linked by him again - it has nothing to do with the OP on that thread.