Foreign investment up

An annual report launched by the United Nations Conference on Trade and Development (UNCTAD) in the Pakistani capital, Islamabad, on Thursday said Pakistan had seen a substantial increase in foreign private investment in 2003. The World Investment Report (WIR), which was launched simultaneously in 80 countries, is an analysis of Foreign Direct Investment (FDI), with an emphasis on development implications. The current report focuses on global fluctuations in FDI and the role national policies and international investment agreements play in attracting FDI. According to the report, FDI for 2002 in Pakistan was US $485 million dollars with an increase to $789 million dollars in 2003. The finance industry and oil and gas sectors saw the largest improvements, with the United Kingdom contributing 30 percent of the FDI in 2003 and the United States contributing 25 percent, the report added. However, global FDI continued to decline for the second year in 2002, affecting over one half of a total of 195 countries, the report maintained. "The decline in FDI was uneven across regions and countries, with falls in the manufacturing and services sector but increases in the primary sector," former chief economist of the Planning Commission of Pakistan, Fasih Uddin, told a press conference at the launch. Although FDI flows to developed countries declined to $460 billion in 2002 from $590 billion in 2001, FDI flows to South and Central Asia increased. "Prospects for FDI in Pakistan have improved. The factors which are favouring FDI are: higher economic growth, macroeconomic stability, reforms, privatisation, and the political and law and order situation," Uddin said. Despite a favourable climate, the position of Pakistan in relation to other countries competing for FDI would remain weak, he maintained. Two important issues outlined in the report needed to be taken into account in policy decision-making if there was to be continued improvement, Uddin said. "The Potential Index categorises Pakistan with low potential and as an under-performer. Incentives alone will not be enough to improve this." The report also shows that bilateral and regional investment agreements have helped in FDI flows. Pakistan has not given attention to this aspect. "These possibilities need to be explored," he stressed.