KARACHI: Foreign private investment (FPI) jumped by 82 per cent to $630 million in the first five months (July-November) of this fiscal year, the State Bank said on Tuesday.

The main reason for the jump was a rise in the portfolio investment, while the foreign direct investment (FDI) showed moderate improvement during the period.

Total portfolio investment was $207m against a net outflow of $9m in the same period last year.

The FDI, the most important inflow which gives the real picture of foreign investment in a country, grew by 19pc to $422m over last year. However, the inflow size, the lowest in region, is not significant for an economy of 200 million people.

Though the country succeeded to improve its image by launching Eurobonds and sukuk (Islamic bonds), for which it received overwhelming response from the international market, the continued terrorism remained the main hurdle in the way of FDI.

Oil and gas exploration remained the most attractive sector for the FDI receiving $150m during the five months. It is believed that the country has vast potential for oil and gas exploration but the investment, despite being the highest compared to other areas, was too little for this high-spending sector.

Telecommunications attracted $147.4m as FDI, the second highest amount. The situation has significantly improved compared to the last year when the sector noted a net outflow of $167m in five months.

However, the IT services sector witnessed the worst situation as its net outflow was $33.8m compared to last year’s $500,000.

Unlike previous year, the financial business fell sharply to $25m from $66m in the July-November period. Financial businesses have been on positive side but the profits earned by the sector are not attractive. The financial institutions are playing it safe by doing most of their business with the government, but the yield is low.

Published in Dawn, December 17th, 2014