KARACHI, Aug 30: The foreign direct investment (FDI) inflows recorded an increase of 76 per cent at $340 million in the first month (July) of the current fiscal year over the corresponding month last year.

The State Bank of Pakistan on Saturday reported that the telecommunication sector proved to be the most popular sector for foreign investors as it received the lion share of $147.7 million in the month under review as against the $27.2 million in the same month last year.

The country had attracted highest foreign investment of $1.626 billion in the communication sector in 2007-08 while the telecom alone pocketed $1.440 billion of the total.

Despite imposition of duty on mobile phones in the current budget its import has not shown any decline.

A senior analyst predicts that the telecommunication will receive much higher foreign investment this year as the government wants to divest its stakes in the Pakistan Telecommunication Company Limited (PTCL). He said the government still possessed about 60 per cent of the company.

The financial sector, which attracted $1.608 billion in 2007-08, received $43.4 million in July 2008 against $28 million the same month last year.

Analysts said most of the inflows of foreign investment in the banking sector were because of the merger and acquisitions. NIB Bank and Barclays have entered the country with hope to find the potential for their growth.

They said more investment was expected as the banks would go for expansion. Bankers said more local banks could be sold out to foreign buyers which would boost the foreign investment in the financial sector.

The government is likely to launch Global Depository Receipts of UBL and HBL in the international market to fetch badly-needed foreign exchange.

Oil and gas exploration sector attracted $37 million in FDI in July 2008. It fetched $635 million in foreign direct investment in 2007-08.

The government has significantly increased the wellhead prices of oil refineries and gas fields which may woo more foreign investment.

“The beginning is encouraging but the inflow of FDI depends on the policies of the government which currently busy at the political front paying little attention to the economy,” said a senior analyst.