World Economy

Pakistan FDI Declines 46%

Pakistan FDI Declines 46%Pakistan FDI Declines 46%

Foreign direct investment into Pakistan declined 46.8% to $803.2 million in the eleven months of the current fiscal year 2014/15 compared with $1.50 billion in the corresponding period of last fiscal year, according to central bank data released on Tuesday.

During May, the country witnessed a net capital outflow of $7 million as against the inflow of $612.2 million in May 2014. Total foreign investment was also down 31.6% to $2.62 billion in July-May FY15, AAP reported.

“FDI inflow has been falling for several years after peaking in 2007-08, due to factors relating to the global financial crisis, restructuring of operations by global corporations and financial institutions, the saturation in telecom sector etc,” said Sakib Sherani, former government advisor and CEO at macroeconomic Insights.

“However, Pakistan’s internal security situation over this period, and the mismanagement of the economy, have been very significant factors keeping foreign investors at bay,” Sherani said.

He said issues including high-profile cases of Tethyan Copper Company and Al-Tuwairqi Steel have also tarnished Pakistan’s image.

However, portfolio investment at local bourses sustainably increased to $881.6 million in July-May FY 15 as against $212.2 million in July-May FY14.

Analysts said improved economic fundamentals help attract foreign portfolio investment into the country.

“…Credit rating agencies have improved Pakistan’s ratings, it gives positive signals to foreign investors, bolstering their confidence in the economy,” said Muzammil Aslam CEO at emerging economics. “Resultantly, foreign investment at stock market is increasing.”