FDI inflows dip 10 percent in July-February period

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The Foreign Direct Investment (FDI) continued to post a downward trend mainly on political uncertainty, plunging by as much as 10 percent during the first eight months of the current fiscal year (2012-2013) (FY13).

Citing political uncertainty as a major factor, analysts said that this trend had been persistent over the past five years, adding that this was despite the government''s liberal policies, which allowed foreign investors to repatriate 100 percent profit and dividend gains on their investments in Pakistan.

Other factors, they said, impeding the flow of foreign investment were worsening law and order situation, poor infrastructure and persistently rising energy shortfall. "At present, foreign investors have adopted a wait-and-see policy because of the upcoming elections and it is being expected that the post-election scenario will be different than the present one," analysts said.

A report compiled by the State Bank of Pakistan (SBP) showed on Friday that foreign private investment, comprising FDI and portfolio investment, surged by as much as 47 percent during the July-February period of FY13. Inflows of foreign private investment surged to $672 million in the same period against $458.3 million in the corresponding period last fiscal year, depicting an increase of $232 million. During the period under review, portfolio investment witnessed an upward trend while FDI continued to decline. FDI plunged by 10 percent or $54.1 million to $504.4 million during July-February period of FY13 against $558.5 million in the same period of the past fiscal year.

During the period, overall FDI inflows stood at $1.405 billion against outflows of $900.7 million, as a result direct investment stood at $504 million. However, the second component of foreign private investment - portfolio investment -registered a positive trend: it attracted $167.5 million in the first eight months of the current fiscal year against an outflow of $100.3 million in the corresponding period of last fiscal year.

Courtesy: Business Recorder

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