ISLAMABAD: The inflow of foreign direct investment (FDI) into Pakistan is on the rise and the country received $2640.9 million FDI last year.
The increased amount of FDI enabled the government to pay $1009.6 million to the foreign countries during the fiscal year 2013-14.
FDI is direct investment abroad where the investors have a complete control over their capital. There is difference between portfolio investment and foreign direct investment. Hence in case of FDI, the investors have direct effective control or managerial involvement on their investing capital while in case of Portfolio investment they have no managerial involvement and control.
A source at the Finance Ministry told this scribe that more profitable areas identified for FDI in Pakistan were energy sector, information technology and telecom, education, engineering, mining, machinery, construction, pharmaceutical and the power sector.
“Thus, FDI improves the social welfare of the society by providing employment opportunities, increasing per capita income, reducing poverty, improving trade and accelerating economic development of the country,” the source said, suggesting that for enhancing more FDI Pakistan needed to encourage physical infrastructure and reduce political instability and terrorism, which were the main hindrance in the way of FDI inflow.
The source said that usually, FDI made by large multinational corporations (MNCs) through merger and acquisition, or through the construction of a new facility, moreover, FDI composed of three parts as given: Equity capital: It was the foreign direct investors’ purchase of shares of a firm in a country other than its own shares.
“The government desires to encourage investors in order to support investment activities in Pakistan because Pakistan is gateway for foreign investors into Central Asia through which the volume of external trade can be expanded,” the source observed.
“Significant improvement in the country’s overall macroeconomic environment and sound policies helped attract relatively large inflows of FDI in Pakistan,” the source said.
He said further that as per investment friendly policies devised by the government, the foreign and domestic investors could direly invest in every sector and even there were no limitations on bringing in or taking out capital from Pakistan.