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Why getting foreign investment is difficult

Faced with a balance-of-payments problem, Pakistan urgently needs as much foreign investment as possible. This need becomes all the more urgent keeping in view a limited scope of volumetric expansion in exports and remittances in the short term.

Pakistan’s foreign direct investment (FDI) grew to $2.56 billion in 2019-20, up from $1.36bn in 2018-19 but less than $2.78bn recorded in 2017-18. Foreign portfolio investment (entirely in government debt securities due to the then prevailing lucrative high yields) had shot up to $2.45bn in 2017-18 but then plunged to minus $1bn in 2018-19 and finally stood at minus $241 million in 2019-20. The PTI government, now in its third year, is trying to take FDI to new heights and take foreign portfolio investment — in both government debt papers as well as stocks — into positive territory once again and the most recent data shows its efforts have started yielding a moderate success. By the way, foreign portfolio.

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