Pakistan has witnessed a substantial fall in foreign direct investment (FDI) inflows in 2008-09 in line with all other developing countries. However, the case of Pakistan is exacerbated by the deteriorating security environment.
According to the Economic Survey (2008-2009), US kept its distinction of being the largest investor with 23.2 percent stake in the FDI. Other big investors originated from Mauritius (10.0 percent), Singapore (7.7 percent), UK (6.9 percent), Switzerland (6.6 percent), UAE (5.3 percent) and Hong Kong (3.9 percent).
The communication sector (including Telecom) spearheaded the FDI inflows by accounting for 27.3 percent stake during July-April 2008-09 followed by financial business (22.4 percent), energy including oil and gas and power (22.7 percent), and trade (4.9 percent). The current wave of uncertainty in the global demand and economic activity in the country has a major backlash on FDI inflows.
The overall foreign investment during the first ten months (July-April) of the current fiscal year has declined by 42.7 percent and stood at $2.2 billion as compared to $3.9 billion in the same period of last year. The overall foreign investment has two components - foreign direct investment (FDI) and portfolio investment, ie, investment in the equity market.
Foreign direct investment (private) showed more resilience and stood at $3205.4 million during the first ten months (July-April) of the current fiscal year as compared to $3719.1 million in the same period last year thereby showing a decline of 13.8 percent. Private portfolio investment on the other hand showed an outflow of $451.5 million as against an inflow of $98.9 million during the comparable period of last year.