Foreign direct investment in Pakistan could return to a positive trend this year, but militancy is a deterrent to investors, the country's investment minister said on Thursday. Floods last year caused nearly $10 billion in damages to Pakistan, and the country's costly war against Islamist insurgents has also weighed on its efforts to attract foreign investment.
Foreign direct investment fell 15 percent in the first six months of fiscal year 2010/11, to $830 million. But Saleem Mandviwalla said the end of the global recession would help growth and investment into Pakistan. "I feel (FDI is) a very cosmetic fall. I can see the graph now moving towards the positive side," he told Reuters in an interview. Mandviwalla was in Britain to meet investors.
Britain is Pakistan's second largest trading partner and Mandviwalla earlier told an investor conference that he would like to see Britain double its trade with Pakistan in the next five to 10 years. But he added many investors were scared to go into Pakistan due to militancy levels.
"Our problem is basically terrorism. It's a very uphill task for me to talk about investment in this environment," Mandviwalla said. "It brings us down, we sometimes wonder how we will reach our goals that we set out every day to reach," he told the conference. The government has revised its 2010/11 GDP growth forecast following the floods, to 2.5 percent for the fiscal year ending June 30, compared with an earlier forecast of 4.5 percent. Growth was 4.1 percent in 2009/10.
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