Foreign investment falls in negative territory
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KARACHI: The foreign direct investment (FDI) fell to negative $7 million in May compared to $612m in the same month last year, while the foreign private investments (FPI) were just $35m against $671m a year ago, said the State Bank of Pakistan (SBP) on Tuesday.
The month proved to be hard, as both the FDI and FPI fell sharply to negative or negligible.
The government, for the last two years, has been expressing hopes of huge foreign investment in the country, particularly from China. However, the data indicates that so far it has failed to mobilise foreign investors.
Analysts believe that the country lacks policy to attract foreign investors, who are said to be reluctant for a variety of reasons.
The details revealed that the FDI during July-May 2014-15 fell to $803m, almost half of $1,509m in the same period last year. The FPI also slipped to $1,685m compared to $1,721m in the same period last year.
The only improvement was noticed in the portfolio investment which surged to $881m compared to $212m during July-May 2013-14.
The government, which presented its third budget recently, has been making tall claims about the economic growth and foreign investments, but it appears that it is leaning on Chinese investment for fast-paced development.
Published in Dawn, June 17th, 2015
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Comments (68) Closed
Jun 17, 2015 10:44am
This is the truth. The economy is shrinking. The minister can lie about economic growth but the fact remains with FDI levels dropping,how can you have economic growth?
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Jun 17, 2015 10:50am
Foreign investors will return if Pakistan can improve security situation and consistency in the policies and political system
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Jun 17, 2015 10:50am
I wish prime minister and finance minister bring back their HARD EARNED assets and investment back to Pakistan.
Both of them not trusting Pakistan to invest their OWN money .
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Jun 17, 2015 11:23am
Security situation, energy deficiency and small market size are big deterrents. Here again if there was a common south Asian market manufacturing FDI might flow in.
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Jun 17, 2015 11:35am
"A variety of reasons" boil down to just two. Business investors are concerned primarily with profits and risk. Some business plans on paper are not profitable, others conceal too much risk.
From the perspective of financial analysis future events in Pakistan are not very predictable.
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Jun 17, 2015 11:37am
pakistan has been selling CPEC hard to the world but it won't produce results because foreign investors are much smarter than people of pakistan who just believe whatever dreams the government shows them.
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Jun 17, 2015 11:57am
Very well done PTI. You achieved the aim through 'dharnas'.
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Jun 17, 2015 12:26pm
Investment in Pakistan is High risk and low return; only Pakistanis working in middle east will invest their money; because they have no choice.
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Jun 17, 2015 12:31pm
Wow but they say economy will grow 5.5% this year...
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Jun 17, 2015 12:45pm
They don't have slightest idea about economics
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Jun 17, 2015 01:01pm
Agreed with the analysts that Pakistan lacks policies for foreign and domestic investment. The Ministry of Finance has and is acting as a full time accountant for juggling money from one account to another - borrowing from lenders to pay lenders. The government has failed as a policy maker. It has also failed to take any action in terms of tax reforms and reduction of government controls; essential steps for encouraging investment and for unleashing the force of free markets
Another failure pertains to provision of security for life and property AND let us not forget the inefficient legal system which fails to provide legal security to the potential investors.
The situation is so bad that even the finance minister has chosen to invest his money in the UAE and the PM in UK and Saudi Arabia. The Government and the Parliament need to do lots of work if Pakistan is to be set on road to socio-economic development
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Jun 17, 2015 01:19pm
FDI to India doubled to US$ 4.48 billion in January 2015, the highest inflow in last 29 months, from US$ 2.18 billion in January 2014.
The foreign inflows have grown to touch US$ 25.52 billion during the April-January 2014-15, up 36 per cent year-on-year (y-o-y), from US$ 18.74 billion in the corresponding period last fiscal, according to Department of Industrial Policy and Promotion (DIPP) data.
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Jun 17, 2015 01:26pm
@Chopra
Sir the FDI coming to India if well more than US $ 50 billion. In addition to this, the money sent by Indians back home is about US $ 71 Billion. The money coming through underhand sources is likely to be very high also.
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Jun 17, 2015 01:35pm
@Shaukat Ali Who is stopping Ishaq Dar & Shareef family to invest in Pakistan rather than UK, Turkey, KSA , UAE , US & Spain.
Charity begins from home, show your trust on Pakistan and then blame PTI.
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Jun 17, 2015 01:44pm
Let the PM and his allies bring their money back and invest in Pakistan rather than supporting economies of rich countries. The day they are sincere in their claims, others will start trusting them. Why others are expected to invest in Pakistan while our rulers are smuggling hard currency out of the country through models, airline crew and themselves.
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Jun 17, 2015 02:02pm
The elites both political and establishment are primarily basing their strategies on boots, bayonets and bullets. The results are for all to see. We need to invest in the social sector and engage the communities that live in this country. We need urgent reforms in the court system and the Police both are incompetent to the core. The elites are focused merely on military operations, metro bus and motorways. We desperately need improvement in courts and Police, investment in Education before FDI may come our way. Even for the Pak China Corridor you have to engage the communities through which this project passes.
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Jun 17, 2015 02:23pm
Improve security and eradicate corruption, FDI will follow.
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Jun 17, 2015 02:25pm
Why does the government not encourage domestic investors?
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Jun 17, 2015 02:28pm
So all this hoopla about economic growth is mere propaganda??
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Jun 17, 2015 02:30pm
Pak should beware of becoming an economic basketcase.
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Jun 17, 2015 02:33pm
@CYRUS No, it boils down to Trust only.
Economics not only involves fulfilling needs but also creating needs for the people as well.
When Sharifs and Dar asks foreign businessmen to invest in Pakistan their first question is why don't you bring your money back to the country?
how could a foreign investor thinking of investing in Pakistan when the Premiere and his associates are transferring their assets abroad.
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Jun 17, 2015 02:47pm
Vote in incompetent useless people then don't expect anything different those who are in doubt just go ahead and checked the record levels investment under the Musharraf era with Shaukat Aziz as finance minister.
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Jun 17, 2015 03:02pm
If the rulers are busy plundering then what else do you expect?
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Jun 17, 2015 03:03pm
Utter failure of Ishaq Dar's senseless initiatives! If things remain like this, even CPEC would be in serious doubts. His logic in taxing foreign workers' remittances to fill his coffers was bound to react in negative.
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Jun 17, 2015 03:24pm
Doesn't matter if you have no foreign investment, no education, no jobs, no power and no water. Atleast you have your nuclear weapons. Hope you can find some use for them when the economy collapses.
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Jun 17, 2015 03:30pm
Who cares, when country got wealthy and powerful friends like China and Saudi Arabia? An amazing 46 billion $ is in pipeline and why to worry about pea nuts?
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Jun 17, 2015 03:49pm
The whole economy was at standstill during the dharnas.
IK still threatens that he will come on streets.
MQM calls for strikes
PML N is corrupt. They start project with 40 billion and finish in 90 billion.
Dar own investment is in Dubai
PPP is not serious
PTI is more interested in zakat sadqaat for shaukat khanum than foreign investment.
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Jun 17, 2015 04:20pm
Pakistan is already a super power, it does not need anyone. Hail China
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Jun 17, 2015 04:30pm
Thanks to Dharna politics and continued political instability and uncertainty that has taken its heavy toll on the Economy of the country. On the other hand the weakened, downgraded, humiliated government greatly lacks confidence and comes under immediate and relentless criticism and pressure from all the quarters for any initiative it takes. The net result is that the country and its economy has come to a stand still.
We should learn to respect the mandate of the government and allow it to function as it should be to serve the nation to its best of abilities. Government should complete its tenure without interference and unnecessary pressure on it which is actually proving to be counterproductive as it is further slowing down its performance and eventually the nation as a whole is paying the cost.
If unsatisfied with the performance of the government people should vote it out in the next elections. That is the only way forward.
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Jun 17, 2015 04:34pm
See the results for dwindling foreign direct investment, despite so many trips to foreign countries, especially UK, by our PM at a major cost to the taxpayer. Does anyone care?
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Jun 17, 2015 04:36pm
@NY If our own leaders keep their money outside the country and ask others to invest in the country, this result of dwindling FDI is expected.
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Jun 17, 2015 04:39pm
@bharat
Wow! No economic growth without FDI; whereas the literature is split about the impact of FDI on host country. Don't you forget the motives behind Financial Liberalization advanced by IMF, which are to support crony capital of Big world powers (this is in brief)
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Jun 17, 2015 04:49pm
In plain words the situation is grim.
The investors would want skilled hardworking labour force, peaceful working environment and progressive domestic policies. Investors do not seem to have confidence in all these areas and are shying away.
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Jun 17, 2015 04:50pm
Its not about FDI, the flight of cash from Pakistan by Pakistanis is more alarming. if you are struggling to convince Pakistanis to keep money in Pakistan, will be tough to convince the FD investors to invest.
Stop flight of cash from Pakistan so super models could just stick to modeling.
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Jun 17, 2015 04:56pm
Who will invest in a country where certain people on talk shows enjoy themselves and keep betting and giving dates of the departure of the government on daily basis. Who will invest in a country where few individuals out of their political interests and ambitions could hold the entire nation hostage for months and take pride in it and yet remain untouchable and unaccounted for. Where sanctity of parliament and constitution is challenged and attacked by none others but those who claim to be the most noble and upright. Who will invest in a country where those institutions that are supposed to defend it externally weaken it internally. Investment in a country where corruption is widespread and way of life where there is no law and order and where there are mafias and in general people are deceitful foreign investment is nothing but a daydream.
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Jun 17, 2015 04:57pm
@bharat Even with FDI drops the economy can grow through increased productivity and exports from home-grown industry. The FDI drop can be used an sign that the economy will shrink in the future but it does not have a bearing on the short term economic outlook.
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Jun 17, 2015 05:24pm
So what we have CPEC.. We all will be millionare after 15 years. If not then so what we are nuclear power..
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Jun 17, 2015 05:32pm
Why worry? We have nuclear arsenal, metro bus and big brother China.
Internal security, Education, Skill development, Investment and industrial policies do not matter at all...
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Jun 17, 2015 05:48pm
We may understand the SBP data on FDI, but how Moddes change Pakistan's and Pakistan's banks rating from mins to positive.
How KSE jumping upon the bull and now it is trading at its top with top volumes?
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Jun 17, 2015 05:51pm
You will get investment only if you get ride of terrorists.. North /North east India suffered this problem during 80s to 90s , but south India managed to get investments even at the troublesome days .. which is safe & secure territory . Outsiders/fringe elements find it little hard to survive in this place because of its language & culture ... country like pak has a huge potential , given its giographic location( close to gulf/china), so get ride of terrorists & other fringe elements .. which is good for everyone... A prosperous pakistan is actually good for India..
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Jun 17, 2015 05:54pm
There is a lot of competition world wide to attract foriegn investment. Investors has too many options. Why investor will choose a country with unpredictable political situation, law and order situation, safety concerns for foreigners, energy crisis, corruption in government departments
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Jun 17, 2015 05:59pm
When rulers and their cronies syphoning off billions from the country, how can inward investment be positive?
When boats with millions of hard cash, when private jets flying away with millions of dollars every week, when model ferries cash for these goons make trips per week !
why complain? first keep this capital inside the country, arrest and punish who are bringing economy into its knees! who funds terror outfits too!
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Jun 17, 2015 05:59pm
There are people who want to invest in Pakistan. Problem is the hurdles created by the process and the bureaucrats who are sitting on the files. Either they want there palms to be greased or they are afraid to sign anything because of NAB.
If the government can assure the investor that there will be no hurdles and the process will be transparent and the government will facilitate investment, there can be hundreds of millions of investment especially in the energy sector .
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Jun 17, 2015 06:04pm
@timetostopthis yes indeed, we had given nuclear program to these incompetent political clowns we wouldnt have nuclear too. we would have all ills and no nuclear!
dont worry Pakistan economy will still not collapse!
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Jun 17, 2015 06:05pm
@Yasir Khan Pakistan Stocks always perform better when economy in shambles as people try to win quick bucks. it has been the trend in last decades. Economy down Stocks up!
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Jun 17, 2015 06:08pm
The world is going towards Solar generation and Pakistani Minister of Water and Power announced that renewable energy projects should be stopped.
Why should anyone invest in a country where the government is so ignorant of the benefits of Solar power.
There are already electricity storage solutions on the market, in a few short years it will become cheap to store electricity.
Americans are trying to travel at 47000 Miles per hour with solar wafers and travel the Galaxy. Pakistani politicians are trying to stop solar generation. Chinese investment will take 10 years or more to generate electricity. The immediate need can be met with solar and smaller hydro projects with short completion time. Good for the country , good for business, good for employment.
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Jun 17, 2015 06:30pm
CPEC initiate is fine but why put all your eggs in one basket? It's time for the PM to make bold moves like trading with India. It's a win-win for all.
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Jun 17, 2015 06:37pm
Make more bombs !!!
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Jun 17, 2015 07:04pm
Pakistani's absolutely clueless about their own Country. 35% for revenue goes to paying Interest and principle from previous loans. 40% goes to Army either directly or Indirectly. Rest 25 % if for 200 Million people. On top of that - Pakistan Army controls Foreign Policy. Civilian leaders are just show piece to make statements against India and go to London or Dubai for vacation.
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Jun 17, 2015 08:25pm
Until peace is not established in Pakistan, dreaming FDI is building a castle in the air.
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Jun 17, 2015 09:00pm
Pakistan being mismanaged and the politicians are deflecting the blame upon India. This is the reality. Until people realize their politicians and bureaucrats are hoodwinking the public there change for better cannot happen. Pakistan is a basket case compared to India. The methods of obtaining aid from countries are also waning. Only bold policies on internal development will save the country.
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Jun 17, 2015 10:02pm
Foreign investors are not blind, they watch TV and news channels full of frauds and corruption beside very bad law and order and poor infrastructure. Some investment do come in power sector because of immediate guaranteed profitability but for the industrialization of country what we need is investment in engineering and chemical industry. Establishment of such industries take time for which we should be able to provide good engineers and technicians beside law and order.
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Jun 17, 2015 11:30pm
Foreign investor look at many factors : 1. profits . 2 safety of their investment. 3. safety of their workers 4. freedom to practice their faith if they are non-muslims . 5. Educational facilities for their children etc.
Recent waves of migrations of minorities to others countries for personal safety and
freedom to practice their faith is not conducive to investments.
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Jun 18, 2015 12:05am
@Adnan
PTI knows only blame game. The effect is only due to the dharnas and nothing else.
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Jun 18, 2015 12:20am
A first step would be for Pakistani people (citizens) and its news outlet media in promoting their country and encouraging investment. Negative thoughts and negative criticism are infectious. We need to be more optimistic and promote our country. Always need to act as ambassadors to our nation which was bountiful resources and remains as resilient as ever!
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Jun 18, 2015 01:14am
With Pakistan's religious and political instability it is simply not prudent to invest in a unstable country...
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Jun 18, 2015 01:42am
Dont worry! China corridor will help us to win them back.
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Jun 18, 2015 02:27am
If all else fails, we can always go beg for money from Saudis China and USA.
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Jun 18, 2015 04:19am
Statistics: Figures do not lie; but liars figure.
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Jun 18, 2015 04:30am
@Omar Pakistan zindabad
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Jun 18, 2015 05:34am
@Adnan Great statement.
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Jun 18, 2015 05:39am
How can I as an investor invest my hard earned money in a corrupt system like Pakistan. I may consider investing in Pakistan after Zardari and Nawaz Sharif has moved his money to Pakistan.
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Jun 18, 2015 06:00am
Then what is this hoopla about Chinese investment? Let us look at India and they rely on private companies from other countries to invest money and not on a sole country.
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Jun 18, 2015 06:27am
@Shaukat Ali When you prime minister and his kitchen cabnet opposition are not investing in Pakistan, why fotigeners or locals would invest in country, this situation was before Dharnas,check the facts then comment.what mr finance minister is been telling from day one is bunch of lies
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Jun 18, 2015 06:28am
Pakistan needs to stop doing the patchwork. It's like the entire building is in shambles, needing some serious structural work, and government is spending money on buying the costly plastic emulsion paint to make it look good.
Costly Metro project was one such patchwork, to make things look good from outside. Instead spend the money on basic infrastructure. In Indian railway budget this year, our government focussed entirely on improving the existing infrastructure as opposed to producing something shiny.
Spending on non-glamorous projects may not translate into votes, but the future generation will thank you for your decisions.
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Jun 18, 2015 06:35am
With CPEC government is putting all eggs in one baskets. If it works out, no one knows to what extent it will be successful. Government is giving some unrealistically high predictions. Economist give a differing opinion. But by focusing only on one big project is too risky. If it doesn't work out, the results would be simply devastating. The worst affected will be the common man, nothing will happen to the politicians.
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Jun 18, 2015 01:27pm
@Chopra : If this momentum keeps on then by 2016-17 India FDI may easily touch more then 60bn$. If everything goes well then in next 2 to 3 yrs India definitely touch into fast economic development.And they say India can't develop without solving issue with Pakistan.Than who is suffering with near zero FDI.
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Jun 18, 2015 09:36pm
@Naseer
Sir, you need to learn the difference between FDI and domestic investment first. The subject is FDI and the FDI has been reduced as no foreigner will be willing to invest when uncertainty has been caused due to dharnas. Even CPEC has been delayed by about one year due to dharnas.
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