Foreign investment down 36pc in 2 months

KARACHI - Foreign investment in Pakistan has dropped by 36 per cent during the first two months of current fiscal year 2009-10 amid substantial decline in the inflows of foreign direct investment and net outflows from the portfolio investment. Showing negative growth, the net inflow of foreign investment stood at $412.2 million during July-August 2009-10 against $646.4 million during the same period of last financial year. Similarly, the YoY growth in FDI fell by 57.4 per cent negative as Pakistan received a total of 351.4 million dollars worth foreign direct investment during the two months of current financial year from the inflow of 824.7 million dollars in the corresponding months of the last fiscal year. In the same way, portfolio investment at local bourses posted a massively negative growth of 134.1 per cent as recorded at $60.8 million in July-August FY10 against $178.3 million in the said period of FY09. According to the latest break up of foreign investment, the total foreign private investment inflow with privatisation and without privatisation proceeds declined to $412.2 million during respective two months of July-August 2009-10 from $648.0 million in the same course of FY09 by depicting 36.4 per cent negative growth. This turn out shows that it could not improve the deteriorating position of capital and financial account. The deceleration in foreign investment growth has been compensating by an augmentation in long-term loans. Also, prospects of global economic recovery and thus the revival of international investors sentiments remain week leading to uncertainty for Pakistans balance of payments position. It is interesting to note that Pakistan has attracted considerable amount of foreign investment from advanced economies of Western Europe, America, UK, and Germany however, at the same time, the sum up of FDI from most of the developed countries including North America badly suffered during analytical period of current fiscal year on account of domestic structural issues and global factors, such as, economic downturn in western economies, countrys bad law and order situation and some global liquidity constraints.

Nonetheless, investment inflows from Saudi Arabia and UAE to Pakistan were down to a great extent in two months of prevailing financial year. The total foreign private investment received from developed countries increased by 153 per cent as stood at 333.8 million dollars during July-August FY10 against 131.8 million dollars in the similar two months of last year. FDI from developed region dropped to 256.9 million dollars during July-August FY10 from 309.4 million dollars during the same period of FY09 where as port folio investment from said region reported to 76.9 million dollars or 143.3 per cent negative during the period under review from 177.7 million dollars during the last corresponding months of FY09. From Western Europe the total foreign investment amounted to $103.6 million, showing an increase of 110 per cent in growth during the said period against $93.3 million while FDI decreased to $83.9 million from $150.1 million in the July-August FY09. Port folio investment recorded at $19.7 million during July-August FY10 against $56.8 million in the same period of last fiscal. From U.S.A. Pakistan received significant 198 million dollars worth over all foreign investment as against $3.5 million, FDI amounted to $140 million from $123.2 million during July-August FY10. In foreign public investment equity securities of which GDRs of OGDC and debt securities, total investment sharply fell to 0.2 million dollars respectively during July-August FY09.

Source: finance.kalpoint.com