The Foreign Direct Investment (FDI) has dropped by 50 percent during the first month of a current fiscal year mainly due to a lack of foreign investors'' interest owing to an adverse law & order situation, a protracted energy crisis and increasing political uncertainty.
Economists said the State Bank of Pakistan has also mentioned that an adverse law & order situation, a lack of infrastructure and rising energy shortfall are some major reasons behind a sharp decline in foreign investment. "Energy crisis is there for the last few years and despite several promises, the government seems to have failed to resolve the power crisis or announce a timeframe to end the crisis, they added.
In addition, availability of utilities, standard infrastructure and stable law and order situation are the basic needs of new investment and the country is facing problems on all these fronts, they said. The State Bank on Wednesday revealed that FDI stood at $42 million during July - first month of FY13 compared with $84.7 million in corresponding period of FY12, depicting a decrease of 50.3 percent or $42.7 million.
The second component of foreign investment ie portfolio investment posted a surge of 198 percent because of some improvement in the country''s equity market. Portfolio investment witnessed inflows of $28.8 million in July against outflows of $29.4 million in the corresponding period of last fiscal year. Net foreign investment, comprising foreign direct investment and portfolio investment, grew by 28.2 percent during first month of FY13. With current decline, net inflows of foreign investment in Pakistan increased to $70.8 million in July 2012 compared to $55.3 million in July 2011, depicting an increase of $15.6 million.