There has been a decline of $1.475 billion, or 52.8 percent, in foreign direct investment (FDI) during eight months of the current fiscal year mainly due to poor law and order situation. The State Bank of Pakistan (SBP) on Monday said that FDI posted a decline of $1.475 billion, or 52.8 percent, during the first eight months (July-February) of current fiscal year 2009-10.
With current decline, overall FDI stood at $1.319 billion as compared to $2.79 billion in July-February of fiscal year 2008-09. According to SBP's statistics, portfolio investment posted a surge of 67.3 percent due to improvement in the country's equity market. However, it is still in the negative position of $295.2 million in July-February as compared to a negative position of $902 million in same period of last fiscal year.
Net foreign investment, comprising FDI and portfolio investment, registered a decline of 45.9 percent during this period. Net foreign investment declined to $1.024 billion in July-February of 2009-10 as against $1.892 billion investment in corresponding period of last fiscal year, depicting a decline of $868 million in first eight months.
In addition, overall private investment posted a decline of 31.5 percent to $1.662 billion from $2.427 billion. "As present foreign investors are reluctant to invest, we believe that in the coming years Pakistan would attract high foreign investment inflows on the back of high profit ratio," analysts said.
They said that slow privatisation process, followed by global economic recession and domestic problems prevailing in the country like poor law and order situation and power shortage are some chief reasons of massive decline in the FDI. Although there was some improvement in the portfolio investment in the first seven months of current fiscal year, now again it has posted a negative position.