KARACHI, July 26: The foreign direct investment (FDI) including privatisation proceeds finally touched $3.531 billion in 2005-06, the State Bank reported on Wednesday.
The FDI without privatization proceeds also showed a healthy figure close to $2 billion. According to the SBP data, the FDI landed mostly in telecommunication sector, which attracted the highest amount.
The FDI without privatisation remained at $1,980.7 million and large share of this amount went to the sectors like construction, food, Chemicals and trade.
However, the privatisation attracted the highest investment in telecommunication where the total foreign amount invested was $1,905m and out of this $1,186m came as privatisation proceeds.
Oil and gas exploration proved once again the attractive area for the FDI and a total $312.7 million were invested in this sector.
However, privatisation of Karachi Electric Supply Company (KESC) made the power sector figures attractive by showing an inflow of $320.6 million as FDI during the whole year. It included the privatisation proceeds of $255 million.
Analysts said that the inflow of FDI without privatisation was also encouraging and some new sectors like food, real estate and construction have developed attraction for foreign investment.
However, the inflows of FDI are still coming mostly from the Western countries. The major investors were the United States and the European Union.
The government has been making efforts to attract investment from the Middle East and a good chunk of money came from the region but the size of the investment was not comparable with the inflows from the developed Western countries.
Analysts said that for the last seven years, there has been an effort from the government side to attract Arab investment but could hardly sell PTCL and KESC to them. A government official said that despite being high degree of uncertainty for Arab investment in the Western countries, especially in the US, the Arab investors were not ready to disinvest their money.
“The fresh Arab investment, which has come in the financial sector, real estate and construction, could attract more if the results produce good return of money for them,” said an analyst.
The sale proceeds of PTCL and KESC constituted a collective figure of $1,441 million. By excluding this investment, the FDI confined to a much smaller figure.
He said the real estate and construction had shown tremendous attraction for the foreign investment and it may bring much more investment during the current year 2006-07.
Analysts said that the trade links with the Arab world had improved during the last five years and the progress made by the financial sector in the country has crated interest for foreign investors.
They were of the view that during the current year banking, trade and oil and gas exploration would be the biggest attraction for the investment and the country could again achieve $2 billion FDI without the privatisation proceeds.
However, the most disappointing for the planners could be the Chinese investment, which is meager, especially in the wake of warm and long good relations between the two countries. Chinese investment was just $1.7 million and last year it invested only $0.4 million.
