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Decline in FDI

Decline in FDI

A State Bank of Pakistan report reveals that foreign direct investment has declined to only $152.7 million in March as compared to $318.3 million in the same month of the last year partly because of political uncertainty ahead of the general elections which are to be held in a few months. However, overall FDI increased in the first nine months of the current fiscal year by 4.4 percent to $2.09 billion from $2 billion in the same period of the last year. The report says the latest monthly investment is the lowest of August 2017 when it received only $152.5 million. The volume of the Pakistan’s economy has continuously been expanding which has recorded an increase of 5.8 to the Gross Domestic Product in fiscal year 2018 as compared to the last year’s 5.3 percent. The country is also facing problems on macroeconomic front and this could be another cause of decline in the foreign investment. Unless the government devises a comprehensive industrial policy on long term basis, the GDP growth to the desired level will not be achieved. Unfortunately, industry is one of the most neglected areas in the government list of priorities which not only faces structural issues but also administrative troubles at the hands of various agencies.

A drop in the FDI is unimportant keeping in the view overall increase in its volume during the entire year. But the percentage could further drop during the current month if political uncertainty worsens and rupee value is further depreciated. It is difficult to understand why the government targets the value of rupees only all the time and in all the hostile situations. There are a number of methods which could be adopted to repair a damaging situation whether it is lower inflow of FDI or trade deficit. The commercial attachés sitting in the Pakistani missions are abroad could be prodded and motivated to enhance business, trade and investment in the country. They draw hefty salaries and perks at the cost of taxpayers money without doing anything on their part. The prime minister should take daily report of the performance of the Pakistani officials deployed around the world. The second most important work to do is to offer tax holidays and simplify the procedure for investment. In the current situation, Pakistan is at the worst place in ease of doing business index. How a businessman will take interest when he does not know what will happen to his money in Pakistan. Whether there is political instability or not, the sustainable business policies can ensure unabated flow of FDIs in Pakistan throughout the year.