The State Bank of Pakistan (SBP) on Tuesday reported that total foreign private investment in July-February 2005-06 increased by 190 percent to $1.974 billion from $679.9 million in the corresponding period of the last year.
During the first eight months of 2005-06, Foreign Direct Investment (FDI) increased by 151.60 percent year-on-year basis to $1.504 billion from only $597.6 million and portfolio investment by 472 percent to $470.9 million, whereas it was $82.3 million in the corresponding period of the last year.
A significant feature of the data was that besides FDI, year-on-year basis inflow of portfolio investment increased enormously. It followed steep path right from the beginning of the new fiscal year.
During 2004-05, total investment inflow had crossed $1.67 billion mark as against $0.921 billion in 2003-04. However, for the current fiscal year there was hope of further improvement in foreign investment, especially with better macroeconomic indicators and infrastructure.
The government expects that the foreign investment in Pakistan is likely to touch $3 billion by the end this fiscal year.
Inflow of foreign private investment in February this year increased by 375.6 percent to 347.2 million as compared to only 73 million during February 2005.
Apart from this, FDI increased by 235 percent to 276.8 million and the portfolio investment jumped to 70.4 million in February 2006 as compared to 9.5 million in February 2005, which the investors withdrew in the same month of the last fiscal year.
The break-up of investment by countries shows that United States was the biggest investor in Pakistan with FDI of $326.9 million and portfolio investment of $394.7 million, totalling $721.5 million during July-February 2005-06.
Saudi Arabia is the next with total investment of $271.1 million, including FDI of $270.4 million and portfolio investment of only $0.8 million. However, in terms of direct investment, Switzerland was third following Saudi Arabia with $152.4 million. A significant feature of the data is that US portfolio investment during the period showed a high growth, it grew to $394.7 million from $43.5 million in the corresponding period of the last year. Besides this, FDI also grew to $326.9 million from $148.6 million.
Saudi Arabia's direct investment during the first eight months of this fiscal year jumped to $270.4 million, as it was only $10.8 million in the corresponding period of the last year.
Direct investment from the UK slightly moved up to $116.3 million as against $110.9 million of the last year, while its portfolio investment declined to minus $4.1 million as against $12.2 million in the same period of the last year.
FDI inflow from the United Arab Emirates and Netherlands was also sizeable which stood at $76.9 million and $62.6 million, respectively in eight months. The portfolio investment from the UAE jumped to $42.7 million ($28.1 million last year) and Netherlands investment climbed to $4.2 million as against only $0.2 million in the previous fiscal year.
Independent experts believe that the current inflow of foreign investment was not so satisfactory taking into account other countries of the region. During the last 15 years, Pakistan attracted nearly $10 billion with $1.67 billion in 2004-05.
While FDI in India since the onset of the liberalisation process was $36.28 billion (up to November 2005). FDI inflows in 2004-05 has increased by over 42 percent from $2.63 billion in 2003-04 to $3.75 billion in 2004-05 (this represents only the equity capital component of FDI).
During 2005-06 (April-November 2005), FDI inflows stood at $3.36 billion as compared to $2.25 billion during the corresponding period of the previous year.
China's FDI-led growth was a strong indicator where FDI inflows since 1978 amounted to over one trillion dollars with $153 billion in 2004 alone.
This has given a big boost to its economy by improving per capita income to $1,000 and the population living below the poverty line has declined to just 10 percent.
Foreign investors are in direct control of their investment funds, also transfers in the latest technology and modern management practices resulted in economic gains largely from efficient, effective and economic utilisation of the funds.
While the present economic managers boast of over $1 billion FDI during the last fiscal year, the reality is that given the prevalence of poverty and unemployment, this is too negligible an amount to have had a worthwhile impact on our economy.
Even Nigeria, which tops the Berlin-based Transparency International's Corruption Perception Index, has outperformed us by attracting $2 billion in FDI last year and hoped to increase it to $5 billion this year.