Steep fall in foreign investment

[RafaleTyphoon]

Steep fall in foreign investment

Steep fall in foreign investment

THE country witnessed a sharp fall of 61 per cent in the foreign private investment during the first four months of this fiscal year. According to the State Bank of Pakistan the foreign private investment fell to $239.4 million during July-October period of 2011-12 against $610 million inflows noted during the same period last year, a decline of 60.8 per cent. Similarly, the foreign direct investment (FDI) fell to just $340 million, a decline of 27.7 per cent while comparing with the same period of last year.

This should be a cause for concern for our policy makers and especially the economic managers as FDI has become a key in the growth of many developing countries like China, India, Brazil, Argentina, Indonesia and Thailand but Pakistan has been facing shrinking FDI inflows mainly due to security situation. The negligible investment it has attracted is also focused on sectors like oil exploration, telecommunication and energy. Apart from foreign investment, local investment too is shrinking and there are reports of even shifting of industries to countries like Bangladesh. No doubt, security and law and order situation are major hurdles in the way of investment as capital goes to only safer places but safety doesn’t mean physical security alone. In many countries, investors are offered lucrative incentives and all barriers in the way of investment are removed and one window operation is done to expedite the entire process of approval, supply of services and clearances of all sorts. Despite security concerns, investors from countries UAE, Saudi Arabia, China and Malaysia still prefer to invest in Pakistan but they are fully exploited by our bureaucratic system and ultimately they turn their faces to other directions. Similarly, embassies and especially commercial attaches of other countries remain in intensive interaction with the business community of the host countries with a view to attracting investment for their countries but ours are just enjoying R&R abroad. We have been hearing since long that performance of our missions abroad would be judged on the basis of their ability to find markets for Pakistani products and attract investments but the situation has not improved as yet. Again, political leadership has no time to concentrate on economy but economic managers whose whole time job is to look after the economy should demonstrate vision to make a difference.

 

[SBD-3]

Steep fall in foreign investment

Steep fall in foreign investment

THE country witnessed a sharp fall of 61 per cent in the foreign private investment during the first four months of this fiscal year. According to the State Bank of Pakistan the foreign private investment fell to $239.4 million during July-October period of 2011-12 against $610 million inflows noted during the same period last year, a decline of 60.8 per cent. Similarly, the foreign direct investment (FDI) fell to just $340 million, a decline of 27.7 per cent while comparing with the same period of last year.

This should be a cause for concern for our policy makers and especially the economic managers as FDI has become a key in the growth of many developing countries like China, India, Brazil, Argentina, Indonesia and Thailand but Pakistan has been facing shrinking FDI inflows mainly due to security situation. The negligible investment it has attracted is also focused on sectors like oil exploration, telecommunication and energy. Apart from foreign investment, local investment too is shrinking and there are reports of even shifting of industries to countries like Bangladesh. No doubt, security and law and order situation are major hurdles in the way of investment as capital goes to only safer places but safety doesn’t mean physical security alone. In many countries, investors are offered lucrative incentives and all barriers in the way of investment are removed and one window operation is done to expedite the entire process of approval, supply of services and clearances of all sorts. Despite security concerns, investors from countries UAE, Saudi Arabia, China and Malaysia still prefer to invest in Pakistan but they are fully exploited by our bureaucratic system and ultimately they turn their faces to other directions. Similarly, embassies and especially commercial attaches of other countries remain in intensive interaction with the business community of the host countries with a view to attracting investment for their countries but ours are just enjoying R&R abroad. We have been hearing since long that performance of our missions abroad would be judged on the basis of their ability to find markets for Pakistani products and attract investments but the situation has not improved as yet. Again, political leadership has no time to concentrate on economy but economic managers whose whole time job is to look after the economy should demonstrate vision to make a difference.

very interesting and well put up article...but FPI is not foreign private investment but foreign Portfolio investment, which has more to do with performance of financial assets (which, to an extent, are also related to law and order situation)