Foreign investment in the country declined by 61 percent during the first month of fiscal year 2011-12 because of adverse law and order situation and uncertainty on the economic front. The State Bank of Pakistan on Monday reported that net inflows of foreign investment (comprising foreign direct investment and portfolio investment) in Pakistan declined to $62 million in July 2011 compared with $157.8 million in July 2010, depicting a decrease of 60.8 percent or $95.8 million.
Analysts said that worse law and order situation, unclear economic policies and energy crisis are the chief reasons behind the decline in the foreign investment. Government officials are already aware of these problems, but no positive steps have been taken by the policy makers to resolve these issues. Although both components of the investment are on decline, yet a major decline has been witnessed in portfolio investment because of global stock crisis.
The foreign direct investment (FDI) dropped by 17.2 percent during the first month of current fiscal year mainly due to lack of foreign investors'' interest. FDI stood at $91 million during July 2011 as compared to $109.8 million in corresponding period of last fiscal year, depicting a decrease $18.8 million.
The second component of foreign investment ie portfolio investment posted a decrease of 160 percent because of some decline in the country''s equity market. Portfolio investment stood in negative position of $29 million in July this year against $48 million investment in corresponding period of last year. Total foreign private investment with privatisation posted a decline of 59 percent to $62.5 million during the period under review from $151.6 million.
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