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According to, the Baseline Profitability Index (BPI) 2015 Pakistan has increased its ranking to 58 for attractiveness to foreign investors among 110 countries. While India has secured first, China 65th and Turkey is at 60th position. In the 2014 index, Pakistan was at the 97th position and Hong Kong was number one.
The Baseline Profitability Index (BPI), ranks countries by their overall attractiveness as targets for a generic foreign investment. The BPI is based on the notion that investors look for growth in asset value, the preservation of that value during the ownership of the assets, and the ease of bringing home the proceeds from selling the assets. Up till now BPI is the only index that is able to combine all of these factors together into a summary that can bring the attractiveness of the country for foreign investment.
The first factor that BPI considers is the growth of the assets value. The BPI assumes that when an economy grows, a given chunk of that economy expands in equal proportion. Then the BPI discounts the assets value by the risk of a financial crisis or security issues that could hamper the investment.
The next factor is the preservation of value. These include corruption or nationalization of the asset by the local government and the possibility that the employees or executives will eat away at profits by giving perks, etc.
Finally, the last point is how much the profits will be worth once they return to the investor. The BPI looks at the capital control policies of the country since these may restrict the repatriation of profits. Then the weather exchange rates will change enough over the five years to affect the value of the investment.
Even though, the jump in BPI ranking appears to be good news, a closer look reveals a different picture. The reason behind the increase in BPI ranking is that Pakistan has scored 1.16 points in the repatriation of return sub-index of BPI. Pakistan is among the five countries that have scored high in repatriation. In the generation of return sub-index, Pakistan is 5th from the bottom, whereas in erosion of return sub-index, Pakistan stands midway.
These findings sit well with actual data on the ground. For instance in the eleven months ending May 2015, Pakistans net FDI inflows halved to $803 million from $1.5 billion in 11MFY14, whereas the profit repatriation in 10MFY15 was close to a billion dollars, leaving the country with $162 million in deficit this year under that broader head. Higher rankings don really matter as much as the reason behind those rankings.

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