Economy
 
Pakistan no more destination for foreign investment, FDI drops by 49 percent
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Visits 589
Visits 589
May 25, 2012
Pakistan is becoming unknown destination for international investment following prolonged energy shortages, worst law and order situation and most importantly amorphous economic policies of the incumbent government.

The recent data released by the central bank of the country shows that the net inflows of foreign investment in Pakistan dropped sharply by 64.7 percent to $563.3 million in the ten months of current fiscal year. The country has lost $1.031 billion during this period as during last year 1,595.1 million were invested in the country by the foreign investors. The major component of the total inflows, foreign private investment is down by 63.3 percent to $595 million as against $1.621 billion in the corresponding months last year. The foreign direct investment registered massive decline to $666.7 million against $1.293 billion in July-April 2011-12, shows decline of 48.4 percent.

Portfolio investment also declined significantly by 122 percent to the outflow of $71.6 million against the inflows of $328 million. The SBP data shows that the foreign investment registered phenomenal growth during the outgoing decade, growing from $483 million in fiscal year 2002 to $4.509 billion in year 2008.

According to the figures the foreign investment started declining from fiscal year 2008 onwards following the departure of dictator Pervaiz Musharaf and start of democratic era. Political stability is the key to foreign investment in any country but the political wrangling and continuously deteriorating law and order situation in the country made it impossible even for local investors to make investment.

Seriousness of the government could be gauged by the fact the during last four years the country has seen four finance ministers. The government which claimed to be the custodian of public interest even failed to provide basic infrastructure to the people. For last four years the people have been suffering from prolonged power outages. Major industries have been shut down and remaining units are at the verge of collapse, large number of people have been rendered jobless. The callous attitude of government authorities has forced masses to resort to violent forms of protests.

The major victims of government’s negligence is the poor masses who have been left defenseless against rapacity of a coldly indifferent and corrupt bureaucrats and politicians.

Expatriates are major source of investment in the country but government is not serious in attracting them by removing hurdles from the way of smooth investment. The situation of country is even forcing educated and skilled workers to leave Pakistan and in such circumstances expectations that foreigners would put their money and life at stake by making investment in the country would be sheer stupidity.

How country’s chief executive, convicted prime minister, Yousuf Raza Gilani reacted to dire situation of the country is unbelievable as he put the country in sorry state. During his recent visit to United Kingdom UK he spoke to CNN, about the conditions of Pakistanis and their desire to leave the country, literally made the interviewing lady speechless when he said “why they don’t leave then” and “who is stopping them”.Perhaps he wants victims of his policies to leave the country rather than finding a durable solution to he pressing problems.

Mr. Gilani’s remakes have deeply hurt the feelings of patriotic Pakistanis but they should know that the man who did not show respect for the judiciary of the country will never respect the sentiments of fellow countrymen, a sorry state for the country and its people. Forget about the foreign investment at least as long as ruthless politicians are the master of destiny.

The lHowever, political instability discouraged foreign investment and it plunged to $2.15 billion in FY10 and further declined to $1.573 billion in FY11.

Regarding sharp decline in the portfolio investment, the analysts said that the recent developments in the political scenario and tax-related issues of the stock market resulted in massive outflows of portfolio investment. The outflows in foreign public investment during July/April 2011/12 witnessed the outflows of $31.8 million against outflows of $26.5 million during the period under review.

Emerging and developing economies continue to perform and have been a source of strength. The global recovery is on its way, although it is fragile. We now expect global economic growth to be 3.5 percent in 2012.

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