Foreign direct investment (FDI) posted a decline of 49 percent during nine months of the current fiscal year, mainly due to the slow economic activities, worst law and order situation and poor infrastructure. Economists said that global economic meltdown and poor industrial infrastructure like power shortage are the major reasons behind the decline in the FDI.
While operation against the militants and rising tension in the northern areas also played an important role in depleting foreign investment. Investors are reluctant to invest in these circumstances when uncertainty is prevailing in the country on political front, they said, adding that although there was some improvement in portfolio investment, FDI has been constantly on decline despite government efforts.
The State Bank of Pakistan (SBP) on Friday said that FDI posted a decline of 48.9 percent during nine months (July-March) of current fiscal year 2009-10. With current decline, FDI declined to $1.553 billion as compared to $3.041 billion in the same period of last year, depicting a decrease of $1.487 billion.
However, portfolio investment during this period registered a surge of 80 percent due to improvement in the equity market. Portfolio investment stood in a negative position of $182.6 million in July-March of 2009 relative to a negative position of $957.5 million in corresponding period of 2008.
Overall foreign investment comprising foreign direct investment (FDI) and portfolio investment registered a decline of 34.2 percent or $712.7 million to $1.371 billion during the first nine months fiscal year 2010, relative to $2.084 billion in same period of last fiscal year. Total private investment including privatisation proceeds witnessed a decline of 23.4 percent to $2.010 billion during July-March as previously stood at $2.623 billion dollar.