Outflow of FDI hits economy

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Urgent steps are needed to stop the rapid outflow of foreign investment from the country which could paralyse many sectors including chemicals, telecommunications and power.

The latest report of the State Bank reveals that the highest outflow during the last eight months of this fiscal year was noted in telecommunications sector which witnessed a net erosion of $456 million.

While the inflow of FDI in this sector was just $136m, the massive outflow could hit the sector hard as the net FDI during the period was negative $319.8m.

It has been the most attractive sector for the investors which showed very high growth rate in the country beating all most all sectors. However, deteriorating economic and political situation forced the investors either to stay away or leave the country.

Following telecommunications, chemicals were the second biggest loser of the FDI as the outflow was $152m during this period compared to just $62m inflow leaving the balance with minus $89m.

The largest inflow was noted in oil and gas exploration that $343m while the outflow was minimum $3.4m for this sector presenting the sector still attractive for the investors.

Highest net inflow after oil and gas sector was the financial business. The sector attracted $254m. The outflow was $52m and the net inflow was $202m.

Attractive sectors like food and packaging and power also lost their charm for investors. The food and packaging posted the surprising picture that it failed to attract even single US dollar during the eight months.

However, the power sector received $120m but the outflow was over $78m. Thermal power received $94m and recorded an outflow of $78m leaving a net inflow of just $15.7m.

The country is in dire need to develop power sector as the energy crisis has crippled the economy particularly the industrial sector which is struggling for survival.

The details showed that every sector noted outflows during the 8 months giving a negative picture of the national economy which could hardly grow with an average of about 3.2 per cent during the last five years.

Out of the total inflows of $1.450 billion, the outflows were $900m leaving the net inflows were just around $500m.

Reports of private as well autonomous institutions have been pointing towards the law and order situation as main hurdle for the foreign investors. Terrorism kept its pressure during the entire 5 years of the just outgoing government and barely allowed investors to give a second thought to their investment policies.

However, the business community and analysts maintain that the previous government failed to adopt any successful economic strategy that could also attract foreign investors.

During the last five years the investors from rich countries landed mostly in the Eastern countries like China, India, Philippine, Indonesia, Malaysia, Thailand and Singapore. Pakistan was left alone despite being market of 180 million Pakistanis.

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