ISLAMABAD: Raising grave concern over the falling trend of foreign direct investment the Pakistan Industrial and Traders Associations Front (PIAF) on Saturday said that the Foreign Direct Investment (FDI) into Pakistan has plunged by 47 percent to $253 million during the first quarter (1Q) of the current fiscal year, indicating that the government has failed to win the confidence of foreign investors due to continued rupee deprecation and uncertainty.
PIAF Chairman Faheem ur Rehman Saigol, in a joint statement along with senior vice chairman Nasrullah Mughal and vice chairman Tahir Manzoor Ch, observed that the inflows under the FDI recorded 31.7 percent decline to $395 million during the quarter under review as compared with $579 million in the same quarter of the last year.
Quoting the data, Faheem ur Rehman Saigol said that the total foreign private investment into the country fell by 36.3 per cent to $241.3 million during the quarter under review when compared with $379 million in the corresponding quarter of the last fiscal year.
The portfolio investment in the capital market registered massive decline in outflow during the quarter under review.
The outflow of portfolio investment recorded $12.1 million during the first quarter of the current fiscal year as compared with the outflow of $100.5 million in the same quarter of the last year. The foreign public investment under the head of debt securities recorded an outflow of $18.2 million during the first quarter of the fiscal year 2022/2023 as compare with inflow of $980 million in the same quarter of the last fiscal year.
The total foreign investment including private and public recorded a decline of 83.6 per cent to $223 million during the first quarter of the current fiscal year as compared with $1.36 billion in the same quarter of the last fiscal year.
The PIAF Chairman said that China has been the leading investor in Pakistan for few years and was a major contributor to the increase in the size of FDI. However, the new fiscal FY23 may drag down the inflows from elsewhere due to slowdown of economies in the developed countries, he warned.
He said that Pakistan has remained a potential market for foreign investors, who still have plans to make fresh investment in the country, but they have continued to wait for the return of economic stability.
He highlighted uncertainty in the rupee-dollar parity as one of the major concerns of foreign investors. He said a slowdown in the economy had badly impacted business confidence. It is must for the authorities concerned to first create an enabling environment for the local businessmen desiring to make new investment.
He advocated the need for raising the country’s tax base so that tax-to-GDP ratio improves from current poor level. He urged the trade officers to explore opportunities to diversify exports of goods and services in their respective areas, asking them to meet the challenges faced by Pakistan in European markets.
He also suggested the ministry to devise strategies for promotion of Pakistani products, calling upon trade officers to take advantage of opportunities offered by China-Pakistan Economic Corridor (CPEC).
He said that previously, foreign investors mostly poured money into the sectors which did not pose a risk to their profit margins due to rupee depreciation such as the power sector. It is hoped that Pakistan’s economy will now gain growth momentum, which should encourage foreign investors to invest in new projects, he added.