ISLAMABAD, 1 December 2003 — Numerous new foreign investors, ranging from Saudi Arabian to Chinese, and Pakistani expatriates in United States, are coming into Pakistan in fiscal 2004, raising the projections of higher, new FDI inspite of rather low flows in recent months.
Besides, capturing the domestic market of nearly 150 million, the new foreign direct private investment (FDI) is focused on locating foreign companies in Pakistan which is increasingly turning itself into a production base for the untapped — but huge — markets of Central Asia and South Asia.
FDI inflows during fiscal 2003 that ended June 30 this year, rose to $798 million, in contrast to $485 million in 2002. It followed on the back of higher economic growth, macroeconomic stability, financial sector and governance reforms, privatization of state owned enterprises (SOEs), upgradation of Pakistan government’s foreign debt and financial sector ratings, and some improvement in law and order situation. The highest FDI came from: United Kingdom $219.4 million, United States $211.5 million, United Arab Emirates $119.7 million and Saudi Arabia $43.5 million. Other investors were from Japan, Hong Kong, Germany, Singapore, Switzerland, Netherlands, and China.
This investment went into financial business. Oil and gas exploration and production is now an attractive field. Petroleum Minister Naureiz Shakoor says, over the next two years, foreign companies have committed to invest more than $1 billion in the sector. Telecom, autos, trade, transport, pharmaceuticals, chemicals, fertilizers and textiles, are other attractive areas. The investment into financial business was $207 million, and $153 million in telecom, trade and transport. But, the inflow of portfolio investment stayed rather low at $22 million. However, it was better than the net outflow of $8 million in 2002, according to State Bank of Pakistan (SPB), the central bank.
After a record rise to $11.7 billion in the forex reserves, and “the improved risk perception as reflected by recent upgradation of Pakistan’s sovereign rating and secondary prices of euro bonds, it is expected, the FDI will gradually pick up in Pakistan,” SBP also says.
Despite the fact that FDI inflows during the first four months — July to October — of the current fiscal 2004 tallied up to $170.3 million, down from $406.6 million in the like period of fiscal 2003, the government analysts still expect, the amount will go up in coming months.
One of the most significant investment plans, just announced by Al-Tuwariqi Group of Companies, Dammam, Saudi Arabia, is to establish a steel billets plant in Karachi. Liaqat Jatoi, minister for industries and production says the government has declared the 100-acre location for the plant as export processing zone in order to allow it fiscal and production incentives. The entire annual production of one millions tons of steel billets by this $100 million plant, will be exported to Saudi Arabia. The export potential of the plant is $180 million to $200 million annually.
