FDI report card – 5 years of the ugly truth

From the highest to the lowest and with the economy tumbling after, the Jack-and-Jill journey of foreign direct investment has been one ferocious reality of the government’s failure to boost investment.
Taking a glance of the figures in the past, the performance on the foreign direct investment front was the strongest during FY08 where the country was able to magnetise a total of 5.4 billion dollars to the capital account. But fine lines began to appear on foreign investment’s pretty face. Now the inflows are back to the same level as in FY04, maybe, more wrinkled.
And standing true to its declining trend, FDI during the eight months of the ongoing fiscal year plunged by 10 percent YoY to 504.4 million dollars. However, the second component of foreign private investment – foreign portfolio investment- registered a positive trend attracting 167.5 million dollars in 8M FY13 against an outflow of 100.3 million dollars in similar period of last year. In February 2013 alone, the FDI inflows stood at 162.8 million dollars, a mere four percent rise versus February 2012.
Without denying the share of hardships faced in shape of energy crisis and law-and-order situation in the country, one finds it perceptually difficult to give the benefit of doubt to the government’s efforts. Even amid some liberal policies like allowing foreign investors to repatriate 100 percent profit and dividend gains on their investments in Pakistan, investors have been too shy. The overall approach has been too timid and not austere at all.
Though the successive governments must be lauded for policy formulation, poor execution and implementation background and the upcoming general elections leave very little room to decipher something positive as of now.
While hopes are pinned with the new investment policy, the latest shot by those at the wheels aiming to bring the investment levels back to 5.5 billion dollars annually, to provide a fillip for the shriveling foreign inflows, a bone of contention here is the lack of implementation mechanism. Frequent changes in policy are yet another reason that has battered the investment scenario in the country.
What is needed to take the investment scenario out of the murky water? Implementing measures to deal with the never-ending energy crisis besides weeding out the law-and-order situation will be the prerequisite for those who take up the office.