Pakistan’s July-January foreign direct investment declines by 1.4 percent

KARACHI: Net foreign direct investment in Pakistan declined by 1.4 percent to $545.4 million in the first seven months of the 2014/15 fiscal year compared with $553.2 million received in the same period last year, central bank said on Wednesday
In January 2015 alone, the FDI inflows declined by a massive 85 percent to $16.3 million as against $108.1 million in January 2014.
Analysts said foreign investors had adopted a wait and see policy because of political uncertainty, and economic and security worries.
“They are closely monitoring Pakistan’s economy as investors need political stability for investment, besides improved economic conditions,” an analyst said.
The State Bank of Pakistan (SBP) in a recently issued report on the state of Pakistan economy also noted that adverse law and order situation as well as political uncertainty was deterring foreign direct investment in the country.
During the period under review, the country received total inflows of $1.652 billion while FDI outflows stood at $1.107 billion.
The foreign portfolio investment in the equity markets surge by 11.8 percent to $169.2 million during July 2014 to January 2015 period as compared to $152.5 million during the same period last year.
However there have been outflows from the stock market and in the month of January 2015, portfolio investment has declined by 47 percent to $16.6 million as compared to $31.4 million in January 2014.
Equity index provider MSCI in May last year reclassified equities across a broad spectrum of markets as part of its semi-annual review and added two securities from Pakistan in the MSCI Frontier Markets Index.
Analysts said that following higher weightage for securities from Pakistan in MSCI FM Index, many of the companies listed on the KSE remained attractive for foreign investors as they offer double-digit returns, low stock prices and resilient business models.
The entire influx of foreign public investment during first seven months of fiscal 2014/15 remained concentrated to debt securities. Foreign investment in Special dollar bonds, Eurobonds, T-Bills and PIBs stood at $973.9 million as compared with $68.8 million in the same period last year.
Overall, net inflows of foreign investment in Pakistan during the first seven months of the current fiscal year stood at $1.688 billion, up 155 percent as against $662.3 million in the same period last year.