KARACHI, May 29: The negative side of the record foreign investments into the country could start haunting the nation as the outflows in the form of profits and dividends have sharply increased, which may reach $800 million by end of the fiscal.

The government’s liberal policy, which allows the investors to take away 100 per cent profits and investments whenever they want, might not be suitable for the country in the longer run.

The new data issued by the State Bank, which reveals more transparency about the economic activity, showed that during the last ten months — July-April 2006-07 — profits and dividend outflows amounted to $655 million. This was much higher than the total outflow $504 million in 2005 06.

It has been a point of satisfaction for the government that huge foreign investments helped it to meet the unexpectedly widening trade gap and current account deficit. During the last ten months of the current year, the country received record $6 billion, while an additional $1 billion is expected till the end of the current fiscal.

Analysts said the foreign investment brought economic growth, while the outflow of foreign exchange was the cost of the economic growth, which every country has to pay.

However, they were not ready to accept that a situation like - Far Eastern economic crisis in 1990s - would happen again that could put Pakistan in trouble.

In 1990s the economic crisis led to massive outflows of foreign investments, which eventually resulted in the collapse of the economies like those of South Korea and Thailand. In those days Pakistan had negligible foreign investments and economists termed the situation a ‘blessing in disguise’ for Pakistan.

Analysts believe that foreign investment could not be attracted without giving complete autonomy for investment and disinvestment and the risk involved in it is a ‘must’ for doing such business.

Others, who differ with the idea of unchecked foreign investment, said there should be some tools to keep monitoring foreign investment as the threat of disinvestment is always there.

“We are the nation of a hot region. Any imbalance in politics of the region could imbalance the economy of the country, which should be discussed at the highest level to prepare a strategy as long-term planning,” suggested an analyst.

Highest outflow in terms of profit and dividend during the ten months was recorded in the power sector where the outflows amounted to $118.3 million during the ten months.

The telecommunications sector was another major sector, which witnessed a steep rise in outflow of dollars. The telecommunications sector sent $107 million abroad during the same period. Previous year, the sector’s outflow was just $17 million.

Other sectors recorded outflow of $92 million from financial business, petroleum refining $48.7 million, pharmaceuticals $48.2 million, chemicals $42.7 million, oil and gas exploration $35.1 million, food $32 million and trade $26.3 million.