Amid global uncertainties, FDI recovery worldwide is one concern for the world. While foreign direct investment plummeted in the developed world, the emerging and the developing countries remained resilient during 2012.
Though developing Asia lost some impetus during the year on account of derailed recovery of FDI globally, the overall decline of three percent in FDI flows to developing world stands close to nothing when compared to the plunging flows in Pakistan.
According to the latest figure released by the central bank, foreign direct investment during the seven months of FY13 skated down by 12 percent year on year. Sadly, this is neither new nor distressing: Unlike its fortunate cousin home remittances, FDI in Pakistan has tapered itself to almost nothing over the past three to four years.
In light of the dangerous three, ongoing law and order situation coupled with the energy crisis and political unrest, it seems that the policy makers have adopted and wait-and-watch approach. However, for the promotion of the countrys yielding potential, a proactive stance would be much welcomed.
The new five-year investment policy 2013, which envisages a target of 5.5 billion dollars annually through readdressing the domestic challenges and simplification and streamlining of procedures for the foreign investors, might be an excellent document, but will be of no use until implemented.
Also, the country requires some diversification; besides strengthening ties with the traditional investors like US and Europe, the policy makers should stretch the envelope to devise policies to attract the yield-hungry Asian giants. Attracting green field projects into the country from the rising Asia makes more sense as the developed world continue to remain under duress.
Also, there exists a somewhat inherent resistance: threat to global FDI recovery. Foreign direct investment, a key source of foreign inflow, is set to continue on a bumpy road due to macroeconomic fragility and policy uncertainty worldwide, according to the Secretary-General of UNCTAD in the latest Global Investment Trends Monitor.
At present the remittance are large resilient. But the question that begs attention is how they will be enough for the balance of payment position when the foreign reserves are depleting very swiftly.
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