Forex inflows through RDA cross a billion dollars mark
In less than eight months, forex inflows through Roshan Digital Accounts (RDA) of overseas Pakistanis crossed a billion dollars mark on April 23.
These accounts are attractive enough to continue to bring into Pakistan huge sums of foreign exchange every month overseas Pakistanis can use these accounts to invest in rupee and foreign currencydenominated Naya Pakistan Certificates (NPCs) and earn intoxicating returns. They also have the choice to invest in NPCs in both conventional and Shariah-compliant forms.
On three-month NPCs, the annualised return is 5.5 per cent in dollars, 5.25pc in pound sterling, 4.75pc in euros and 9.50pc in rupees depending upon the currency of choice for investment. Returns on six-month, oneyear, three-year and five-year NPCS are equally attractive especially on foreign currency denominated NPCs.
This is reason number one for the meteoric rise in forex inflows through RDA. Bankers say that the bulk of $1bn funds received so far have ended up investments in NPCs. Another reason is that the rupee equivalent of forex funds in RDA can be invested into real estate, the stock market and mutual funds as well.
NPCs intoxicating returns is reason number one for the meteoric rise in forex inflows through Roshan Digital Accounts
A surge in total forex inflows in RDA - from $9 million in September 2020 when the scheme was launched to $1bn now - is really commendable.
It has helped Pakistan increase the availability of foreign exchange at a crucial time when forex spending on external debt servicing and imports is high, exports are growing too slowly and foreign investment inflows are low.
But is it enough? What about foreign direct investment? Don't we need it as much as we need forex inflows coming via RDA? In nine months of this fiscal year, net foreign direct investment (FDI) inflows totaled about $1.4bn, down 35pc from $2.1bn in the same period of the last year. And, since this is but a reflection of the ongoing declining trend in FDI inflows the world over, there is a need for some extra efforts to make Pakistan a desirable destination of FDI, particularly in the nowbooming health and technology sectors.
In its Jan 2021 report, the United Nations Conference on Trade and Investment (UNCTAD) said it "expects any increase in global FDI in 2021 to come not from new investment in productive assets but through cross border M&As (mergers and acquisitions) especially in technology and healthcare."
The UNCTAD report noted that amidst a general declining trend in FDI in 2020, India and Turkey were attracting a record number of deals in IT-consulting and digital sectors including ecommerce platforms, data processing services and digital payments.
With some increase in policy focus, Pakistan too can attract FDI into digital and healthcare sectors as the pandemic has made these sectors very strong candidates for both local and foreign investment.
On 3-month NPCs, the annualised return is 5.5pc in dollars, 5.25pc in pounds, 4.75pc in euros and 9.50pc in rupees.