Daily Times

KARACHI: It seems that the world is not endorsing the government of Pakistan’s claims about its rapid growth as the foreign direct investment (FDI) in first five months of current fiscal fell drastically by 45 percent.

The country, which attracted FDI worth $839.7million in July-November period of fiscal year 2015-16, recorded 45.2 percent decline during the first five months of the current fiscal at $459.8 million.

In November 2016, FDI fell by 37.30 percent to $143.7 million, from $229.2 million recorded a year ago in same month, according to the latest data from the State Bank of Pakistan (SBP).

The SBP’s data on FDI showed that portfolio investment recorded impressive growth in first five months of FY17 to negative $95.1 million from negative $192.4 million in same period of FY16. Analysts said the heightened concern about the impending interest rate hike in the US has prompted most investors to shift their funds away from emerging market economies including the Pakistan. Ahsan Mehanti, analyst at Arif Habib Corp, said, “US presidential election has impacted overall global FDI scenario, while following the Trump’s victory, prospects of investment in emerging markets have been faded as rising FDI outflow from emerging markets is not favouring Pakistan also.”

He said persistent political uncertainty in Pakistan was another main reason of declining FDI. The present regime’s success has not been measured because the government stay focused only on the CPEC projects during three years. “Despite the fact that FDI numbers are expected to improve in near future due to heavy investment under CPEC, government should appoint foreign minister in order to pave the way for other international investment’, he added.

“The tenure of Pakistan People’s Party (PPP) was much better than current rulers as current average of FDI in three years was below from the FDI average in the PPP led government’s era,” senior economist Dr Shahid Hasan Siddiqui said.

Despite repeated claims of the government regarding country’s growth and acknowledgment by International Monetary Fund (IMF), FDI remained on slowest ever trajectory in recent times which clearly shows that the word is not accepting the false claim, he added.

The figures being quoted by finance ministry are stage-managed as Senate Committee has been termed tax revenues and budget deficit improvement manipulated already, while government’s claims about massive increase in foreign reserves are also wrong, since $13 billion increase in foreign reserves is actually $13 billion external debts, Siddiqui claimed.

In nutshell, our macroeconomic indicators are not impressive, while local investors are hesitant to invest in their own country and Pakistan ranked lowest in global competitive index in south Asian region which has translated in to no FDI at all, added Siddiqui.

One of the sectors in which the country saw a major decline in investments was power with total FDI of $142.5 million in the July-November period, compared to $394.4 million in the same period of last year.

Communication (information technology, telecommunication) was another sector that saw a major shift where the FDI stood at was negative $10 million net FDI in the period under review, compared to $73.3 million net FDI in the corresponding period of last year. Automobile equipments’ FDI declined from $18.9 million in first five months of FY16 to 14.7 million net FDI in same period of current fiscal. Saudi Arabia remained the major country that pulled out 51 percent of its investments in Pakistan during the period under review.