Global investors seem reluctant to capitalise on Pakistan''s improving economy, pulling down Foreign Direct Investment (FDI) by 24 percent in the first four months of current fiscal year. According to State Bank of Pakistan (SBP), the FDI declined by 24 percent during the first four months (July-October) of this fiscal year (FY16) compared to the same period of last fiscal year (FY15). Pakistan fetched FDI amounting to $351 million in July-October of FY16 compared to $462 million in the corresponding period of FY15, depicting a decline of $112 million.
During the period under review FDI inflows stood at $652.3 million against the outflows of $301.4 million. Muzammil Aslam, CEO Invest and Finance Security, said current FDI trend is not surprising and uncertain economic policies, energy crisis and poor infrastructure have largely contributed towards this trend. "It seems that improved economic situation still fails to bring more foreign direct investment in the country as most of the projects are still on papers. We need some practical work to create a strong industrial infrastructure and ensure availability of utilities including water, power and gas to attract foreign investors," he added.
Moreover, the second component of foreign investment in Pakistan, ie, portfolio investment also witnessed a downward trend on the back of poor stock market performance. Portfolio investment declined by 186 percent or $312 million during the first four months of this fiscal year. Overall portfolio investment stood negative at $144 million in July-October of FY16 compared to $167.7 million investment in the same period of last fiscal year. During the period under review, net inflows of foreign investment, comprising FDI, portfolio investment and foreign public investment registered an increase of 18.5 percent to reach $711.6 billion in October 2015 up from $600.4 million.