ISLAMABAD, Oct 22: Pakistan has attracted a total foreign investment amounted to $473.8 million during the first quarter (July-Sept) of 2005-06 as against $201 million of the corresponding period of last financial year, registering an increase of 135 per cent.

A senior official of the ministry of finance told Dawn here on Saturday that the way both FDI and portfolio investment were flowing in, there was no reason why the government should not achieve its $3 billion plus foreign investment target that also included privatization proceeds during the current financial year.

Giving the details, he said that the FDI (component of total foreign investment) during July-September of 2005 amounted to $328.7 million as against $181.1 million of the same period last year, thereby registering an increase of 81.5 per cent.

Most importantly portfolio investment registered a sharp increase up from $20.7 million of the first quarter of 2004-05 to $144.9 million of the same period of the current fiscal year.

The official said that bulk of the investment about 55 per cent of the total FDI came from the United States, United Arab Emirates (UAE) and the United Kingdom (UK).

He said almost 57 per cent FDI came in the oil and gas sector ($63.1 million), telecommunication ($96.3 million) and financial businesses ($27 million). “And there is no privatization proceeds involved in it”, the official said”.

Similarly, he said that bulk of the portfolio investment (87.3 per cent) came from the United States, ($88.2 million) followed by the United Kingdom ($38.3 million) during the first quarter of the current financial year.

“You must note that inflow in the portfolio investment has surpassed with a same margin to inflows in the FDI from USA”, the official said.

Responding to a question, he said that $3 billion foreign investment target also included roughly $2 billion to be provided by Etisalat of the UAE on account of acquiring controlling shares of the Pakistan Telecommunication Company Limited (PTCL).

Answering another question, the official said that inflation remained 8.5 per cent in September 2005 which was down from 9 per cent of the same month of last year. During the first quarter of the current fiscal year, he claimed, inflation had slowed down to 8.6 per cent as against 9.2 per cent of the same quarter in 2004-05, thereby suggesting a downward move on the inflationary front.

The slowdown in inflation, he pointed out, has mainly come from a substantial decline in food inflation during the first quarter of the current fiscal year.

Food inflation in the first quarter of 2005-06 was 8.35 per cent as against 14.1 per cent in the same quarter of the last fiscal year. On the other hand non-food inflation increased to 8.85 per cent during the first quarter of 2005-06 as against 5.9 per cent of 2004-05. “It is interesting to note that the major contribution to the rise in the non-food inflation was house rent, transport and communication”, the official said.

He said the sub-indices of house rent increased by 11.5 per cent as against 9.6 per cent in the same quarter of the last financial year. While sub-indices of transport and communications increased by 16.8 per cent as against 7.2 per cent in the same quarter last year. All other indices of non-food inflation, the official said, remained in the range of 1 per cent to 6 per cent.

In other words, Pakistan’s current inflation is driven by food prices (8.35 per cent), house rent (11.5 per cent) and transport & communications (16.8 per cent, he said.

While inflation pertaining to other indices, the official said, has remained below 6 per cent.