Political uncertainty and poor law and order situation have reduced foreign investment by about $2 billion, or 44 percent, from $4.62 billion, during eight months of the current fiscal year. However, during February 2008 foreign investment had gone up by 15 percent as compared to January 2008.
The State Bank on Wednesday said that overall foreign investment (including foreign direct and portfolio investment) decreased by $2.1047 billion to $2.612 billion during July-February of current fiscal year 2008 from $4.62 billion during the corresponding period of last fiscal year.
"Major share in this dip has been contributed by record decline in the portfolio inflows, as the foreign investors are reluctant to invest in the equity market due to political uncertainty," an economist said.
Statistics show that foreign direct investment (FDI) registered a dip of 15 percent to $2.52 billion during July-February against $2.97 billion during the same period of last fiscal year. Portfolio investment declined by 94.9 percent to $84.5 million as compared to $1.656 billion during the same period of last fiscal year.
However, analyst said that despite the political crisis $84.5 million inflow in portfolio was a positive sign. Without privatisation proceeds total private investment showed a decline of 33.2 percent to $2.50 billion during July-February of fiscal year 2008 as previously stood at 3.818 billion dollars.