Foreign investment dips 61 percent in July

KARACHI: The net inflow of foreign investment in Pakistan fell by 60.8 percent to $61.9 million in July 2011 from $157.8 million in the same month last year, according to data released by the State Bank of Pakistan (SBP) on Monday.

The net inflow of foreign investment is broken into two parts – foreign direct investment (FDI) and foreign portfolio investment (FPI). The FDI slipped 17.2 percent to $90.9 million as against $109.8 million, while FPI fell 160.4 percent to $29 million as compared with $48 million.

The FDI from developed states also witnessed a negative growth of 28 percent with $34.8 million investment made in the private and public sector whereas developing countries contributed $40.4 million to the FDI, which also posted 32 percent decrease as compared with the same month of the previous fiscal year.

The major FDI landed from countries including UAE, USA, UK, China, and Caribbean Island. The potential sectors that attracted foreign exchange were textile, communications and household consumers.

The sharp decline in FPI caused a break in inflow of capital at shares and bond markets, which seems to continue in the current month after panic selling was observed at equity markets following high volatility in global stocks and commodity markets.

The overall FPI in 2010-11 rose to $344.4 million with staggering growth of 634 percent as compared with an outflow of $64.5 million the previous year.

The FPI outflow saw contraction from developed countries by $36.2 million in July as compared with developing countries, which invested $7.8 million FPI in local shares and bond markets.

Analysts said that foreign investors are highly cautious to invest their capital in Pakistan owing to weakening of confidence on business environment and the government policies.

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