KARACHI: Foreign investment fell 60.8 per cent in the first month of 2011/12 fiscal year (July-June) to $61.9 million, because of a decrease in foreign direct investment and foreign portfolio investment, the central bank said on Monday. Foreign investment totalled $157.8 million in July 2010.
Break-up released by the State Bank of Pakistan shows that foreign direct investment fell 17.2 per cent in July 2011 to $90.9 million from $109.8 million in the same period last year.
Pakistan’s unstable security, militant insurgency in the country’s northwest and chronic power shortages have put off long-term investors, analysts say.
With around 300 people killed in July because of violence in the country’s main commercial hub, investors have become nervous and started shunning the country’s main stock exchange.
Foreign portfolio investment fell 160.4 per cent with outflows of $29 million in the first month of fiscal year 2011/12, compared with inflows of $48 million in the same period last year.
Pakistan has struggled with a troubled economy and went for an International Monetary Fund emergency loan package in November 2008 to help avert a balance of payments crisis and shore up reserves.
It received the fifth tranche of $1.13 billion of the $11 billion loan in May 2010.
Published in The Express Tribune, August 16th, 2011.
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I dont totally agree with Pakistan ACCA view point. Investment decisions are not entirely dependent on return on investment; there are many other factors such as business confidence, consumer demand, future expectations etc. Moreover, exchange rate also plays an important role in this regard. Adequate return on investment with declining exchange rate will also deter investment.
I cannot understand why REUTERS keep telling us that foreign investment is going crazily out from Pakistan!!!!
Security conditions are all same all over the world. Be it UK, Libya, Iraq, US or Pakistan. And Investors major concerns are not security in an era where War is an everyday chore, their main concerns are return on investments.
For REUTERS, I'd like to mention few news clips below:
Yamaha Investing $150 in Pakistan http://www.pakistanacca.com/2011/08/03/what-yamaha-is-offering-to-pakistan/
344 Companies Registered in Pakistan in June (30% are foreign companies) http://www.pakistanacca.com/2011/07/21/344-companies-registered-in-pakistani-in-june-2011/
India is Importing its major share of DATES from Pakistan http://www.pakistanacca.com/2011/08/03/our-dates-went-to-india/
POSCO (a South Korean Company) is too much interested in Pakistan http://www.pakistanacca.com/2011/08/06/posco-is-also-interested-in-pakistan/The whole world is in the midst of an economic crisis. Look at Greece, Spain, Italy , Ireland and Portugal. They are all being bailed out by Germany through the EU. Look at the US economy. Sometimes I think people in Pakistan think they are immune from global economic forces but they need to see the whole world to understand what is happening.
Grim situation for Pakistan!!!