January 24, 2008	Thursday	Muharram 14, 1429

KARACHI, Jan 23: Foreign investment fell sharply by 31 per cent in the first half of the current fiscal year, mainly because of much lower inflows of portfolio investment.

Foreign investment is the total sum of foreign direct investment (FDI) and portfolio investment. The State Bank’s half yearly data showed that the pattern of FDI, which rose by 10.3 per cent, kept focus only on three sectors, portrayed as catalysts to boost the economy over the past four years.

According to the figures, the total foreign investment fell to $2.169 billion during July-December 2007-08 against $3.184 billion in the corresponding period of last year.

The FDI rose to $2.066 billion compared to $1.872 billion during the six months of the last year.

However, the FDI’s rise was only because of higher inflows in the telecommunication sector which has been a major attraction for foreign investors. The communication sector received $722 million against $502 million of last year, a jump of $202 million. Out of the total, telecommunication attracted $655 million against $480 million, a rise of 36 per cent.

The pattern of FDI did not change as all significant inflows came only in telecommunication, oil and gas exploration and financial business (banking). Oil and gas exploration received FDI worth $330 million while the financial business attracted $351 million.

Other sectors which attracted reasonably higher foreign investment were cement which received $80 million (against $12 million), information technology $56 million (against $21 million) and IT services $57 (against $17 million).

The major drop was witnessed in financial business as the FDI fell to $351 million against $517 million and power sector where the FDI fell to $34 million from $92 million.

Analysts said the FDI increased despite political uncertainty which was encouraging; however, others were of the view that the FDI remained stuck to only three sectors which yielded unexpectedly high return to the investors and the sectors would remain attractive for foreign investors in future.