Amongst the promises made by PML-N in their manifesto, increasing the investment-to-GDP ratio from the current 12 percent to 20 percent in five years; is what the future of shrinking foreign direct investment (FDI) hinges on.
Standing at a pretty decent mark of 5.4 billion dollars in FY08, fine lines started to appear on the foreign investment young face that is now so scarred. Tumbling like dominos, FDI in the country during the last five years is a staggering reality of the last governments inability to boost investment in the country combined with the scorching energy crisis and poor law and order.
A glance at the industry-wise FDI inflows is no different story. And this can be seen by how 50 to 75 percent of the foreign investment has been restricted to the oil and gas exploration sector in the last couple of years.
The latest statistics revealed by State Bank of Pakistan on Friday for 10MFY13 however, show some signs of appeasement; analysts opine that a lot of it comes from the hopes pinned to the changing democracy in the country.
The 10 months of FY13 were able to magnetise 854 million dollars in FDI which is almost a 30 percent increase in year-on-year comparison, and a four percent increase from the total FDI in FY12. Besides oil and gas attracting 55 percent of the total FDI inflows, petroleum refining, power and financial business also showed significant movement when compared to similar period of FY12.
What is needed to take the investment scenario out of the murky water? To begin with, implementing measures to deal with the never-ending energy crisis besides weeding out the law-and-order situation will be the prerequisite PML-N to allure foreign investors.
And if they go by their plans and their business-oriented impression, one can hope that the trifling share of trade, construction and infrastructure in FDI inflows might start moving up.
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Foreign Direct Investment - Top Economic Sectors
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10MFY13 10MFY12
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$ (mn) % of FDI $ (mn) % of FDI
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Textile 10.0 1% 27.3 4%
Oil & Gas Exploration 467.1 55% 479.7 73%
Petroleum Refining 102.4 12% 7.6 1%
Power 42.4 5% -22.1 -3%
Chemicals - 66.7 -8% 77.9 12%
Pharmaceutical 15.0 2% 1.4 0%
Construction 39.4 5% 59.3 9%
IT & Telecom - 315.7 -37% -292.7 -44%
Financial Business 248.7 29% 46.1 7%
Trade 9.4 1% 20.3 3%
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Source: SBP
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