Pakistan's FDI sees big drop in first 11 months

09:21, June 17, 2010      

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The Foreign direct investment ( FDI) in Pakistan dropped by 39 percent to 2.03 billion U.S. dollars during the first 11 months of the current fiscal year ( July 2009 to June 2010) from 3.33 billion in the same period of last year, economists said Wednesday.

There was an outflow of 133.8 million of portfolio investment during these 11 months, which was, however, much lower than the outflow of 1.103 billion in the same period last year, said a report in the Daily Times.

Total foreign investment registered a fall of 14.8 percent to 1. 896 billion from 2.227 billion during the first 11 months, mostly concentrated in the services sector and little invested in the manufacturing sector.

This trend is harmful for the country in the long run because these investments create few jobs, but generate handsome profits in the country, which is then sent abroad, said an economist.

In a breakdown, oil and gas exploration sector attracted 653.9 million FDI, telecommunications 378.7 million, financial business 153.8 million, transport 115.5 million, paper and pulp 80.7 million, construction 95.5 million, chemicals 84.4 million, trade 103.9 million, petroleum refining 79.4 million, personal services 56.9 million, food industry 71.9 million and textiles 24.4 million.

There was an outflow of 21.2 million dollars from the thermal power generation sector. Besides, there was an outflow of 93.1 million from the IT service industry.

The economist said that most of these sectors are not labor- intensive and, therefore, do not contribute significantly to job creation efforts of the government. He said it was necessary for the government to improve infrastructure and ensure elimination of energy shortages in order to attract substantial foreign investment in the manufacturing sector.

The United States, with an investment of 521.8 million dollars, continued to be the largest source of foreign investment for Pakistan, he said.



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