The government has received positive indication that $800 million, pending from sale proceeds in Pakistan Telecommunication Company (PTCL), would be released by the end of the current fiscal year, which may provide a cushion to the declining foreign investment in the country.
A meeting between the management of Etisalat UAE Telecommunication Company and Privatisation Commission was held here in Islamabad to review how things are progressing to resolve the pending issue. The figures of foreign direct investment (FDI), released by the Board of Investment (BOI), show that privatisation proceeds during last three years remained nil.
A total of $133 million was raised through privatisation in 2007-08. Largest contributor to FDI from July 2010 to February 2011 was in oil and gas exploration with $296.4 million, followed by financial business ($114.1 million), telecommunication ($105.7 million), power ($86 million), transport ($54.7 million), construction ($37.5 million), trade ($27.6 million), chemicals ($19.5 million), personal services ($17.7 million), cement ($17.6 million), textile ($14 million), mining & quarrying ($9.7 million), sugar ($9 million) and other sectors ($137.1 million).
The year 2007-08 showed robust growth in FDI ($5.4 billion). During period under discussion, major inflow was from USA at $1.3 billion. Since then, the country-wise inflow of FDI changed and in July-January 2011. The UAE took the lead with $158.3 million and USA stood second with $142 million. President Asif Ali Zardari's visit to China and Chinese Prime Minister's visit with a business delegation in December 2010 have not yet yielded any positive results in terms of FDI from China. Total FDI from China was $4.9 million in the period under review.
In December 2010, almost 260 Chinese delegates and 150 representatives of Pakistan from different investment sectors participated in a summit at Islamabad while a back to back meeting was also organised. The outcome of the summit was 23 MoUs that would have generated around $25 billion investment in Pakistan.
A review committee of BoI met in March 2011 and observed that no serious efforts had been made to transform these 23 MoUs with only 5 percent progress seen subsequent to the signing of the agreements in three months. The country witnessed 16 percent decline in FDI, inclusive of privatisation proceeds, in 2010-11 (July-January) as compared to 2009-10 (July-January).
The volume of total foreign private investment is $1.301 billion which went down by 19 percent compared to the same period of last year. BoI Chairman Saleem Mandvewalla in an exclusive talk with this correspondent claimed that due to the global economic meltdown, there was a 40 percent reduction in foreign investment world-wide and Pakistan witnessed only 27 percent decline.
The World Bank's recent report on 'Doing Business 2011' noted serious flaws in economic reform agenda of Pakistan and concluded that the country had slipped to the 83rd spot in 2011 against 75th in 2010, indicating growing misgovernance and mismanagement.
Making 'Difference for Entrepreneurs' one of the chapters, the World Bank report indicated that Pakistan's ranking went down in eight categories out of a total of nine as the country, in terms of starting a business, nose-dived to 85th position in 2011 as opposed to the 69th position in 2010, indicating that the ranking declined by 16 notches in one go. It pointed out serious flaws relating to overall governance that created impediments in the way of doing business in Pakistan.