Drop in investment inflow

KARACHI — The investor countries which were earlier major investors in Pakistan have either left or have made minimum or insignificant investment, according to official data issued by the State Bank of Pakistan.

The US, UK and UAE were prime investors in the country in 2006-07, but their investment is now at a minimum level. Total investment by the three countries was to the tune of $2,434 million in 2006-07, but it has now shrunk to $731 million, according to the data.

China, which invested $713 million in fiscal year 2007, withdrew its investment in fiscal year 2009, 2010 and invested just $47 million during the fiscal year.

Saudi Arabia followed the same path as it withdrew investment during the same period, and invested just $6 million. It had invested $103 million four years back.

“The trend of foreign investment in Pakistan is against global trend as most of the developing countries are receiving massive FDI,” said Aabid Saleem, a researcher and analyst.

The situation, he said, also speaks about worst economic environment prevailing for the last four years. The poor economic environment was the direct outcome of the deteriorating law and order situation.

Analysts do not find any change in economic or internal political situation that could be attractive for foreign investors.

The State Bank also said in its annual report that investors’ concerns over governance issues, energy and prevailing security situation prevented growth in foreign direct investment in Pakistan.

Foreign investment, which can play an important role in supporting domestic investment and growth within a resource-constrained economy, continued to decline in Pakistan for four consecutive years in FY11.

Foreign investments have energised new economies, like China, India and Brazil, experts said, adding the glut of liquidity available at the global level could help Pakistan attract a share out of it, but the law and order situation and energy crisis have barred them from landing into the country.

The glut of liquidity is rising at the global level due to shortage of investment opportunities. — Internews