Foreign investment falls 60.8% in July

‘Unstable security, militant insurgency and power cuts put off investors’.


Reuters August 16, 2011

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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COMMENTS (5)

Meekal Ahmed | 9 years ago | Reply Foreign Portfolio will show greater volatility. This is the 'hot' money'. Not to worry, it is probably being diverted and brought back in as 'workers' remittances' with no questions asked and no tax. AS for the point above, these are NET figures.
U kahloun | 9 years ago | Reply

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.

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