KARACHI: Foreign investment is still a dream for the country which succeeded to improve its foreign exchange reserves and made the local currency rise much rapidly than ever against the US dollar.

The State Bank of Pakistan (SBP) reported on Tuesday that foreign private investment at the end of third quarter of this fiscal year fell by 13 per cent compared to the same period of last year. However, the foreign direct investment (FDI) slightly increased by 6pc but the volume of investment was negligible.

The government has been trying hard to attract investment particularly from China, South Korea and Saudi Arabia but the output is not encouraging so far.

According to the SBP report, the volume of FDI, which reflects the direct investment in the country, was $670 million during the first nine months (July-March) compared with $731m during the year-ago period.

The foreign investors showed strong desire to invest in recently launched Eurobond by Pakistan and in place of $500m bonds offer, they bid for $5bn. The country bagged $2bn through the bonds.

However, foreign investors are not ready to land in Pakistan despite frequent offers by the government with full support providing all kind of protection and facilities they may ask for.

“The reason why foreign investors are yet not coming to Pakistan is simple: the country is still not safe for foreigners,” said an analyst, adding that the reason for very large investment in Eurobond was very high rate of return — almost double than many weak economies.

Highest FDI came from Switzerland which was about $193m during the nine months. The country had invested $113m during the same period last year. Hong Kong invested $174m, the United States $172m and the United Kingdom $82m.

Hong Kong had made highest investment of $182m during the same period of last fiscal year. Investment from the United States increased to $174m this fiscal year from $154m, while the FDI from UK dropped to $82m this fiscal year from $145m.

Most Arab countries who are largest trade partners of Pakistan made no investment; in fact, there were net outflows in case of Saudi Arabia (-$33.5m), United Arab Emirates (-$1.1m), Bahrain (-$2.3m) and Qatar (-$44m).

China, which has been appearing as Pakistan’s one of the largest trade partners (the trade balance is largely in favour of China), showed a net outflow of $25m. During the same period last year, China made an investment worth $64m.

Portfolio investment also dropped by 74pc to only $50m at the end of third quarter.