O slideshow foi denunciado.
Utilizamos seu perfil e dados de atividades no LinkedIn para personalizar e exibir anúncios mais relevantes. Altere suas preferências de anúncios quando desejar.
0 
THESIS REPORT 
ON 
“FDI AND FPI PATTERNS IN PAKISTAN” 
Session 2012-2014 
Neelam Asad 
G1S12MCOM0010 
Section “A” 
MAST...
1 
“FDI AND FPI PATTERNS IN PAKISTAN” 
A THESIS SUBMITTED TO 
THE PUNJAB COLLEGE OF COMMERCE 
(UNIVERSITY OF CENTRAL PUNJA...
2 
RESEARCH COMPLETION CERTIFICATE 
Certified that the research work contained in this thesis titled “FDI and FPI patterns...
3 
CERTIFICATE OF EXAMINERS 
Certified that the quantum and quality of the research work contained in the thesis titled, 
...
4 
DECLARATION 
I, Neelam Asad Registration No. G1S12MCOM0010, student of Masters of Commerce 
during the session of 2012-...
5 
DEDICATION 
This thesis is dedicated to my parents, who have raised me to be the person I am today. You 
have been with...
6 
ACKNOWLEDGEMENT 
I acknowledge that, it is an excellent while working on thesis research study. As it is a 
biggest tar...
7 
Table of Contents 
CHAPTER 1 .............................................................................................
8 
CHAPTER 1 
ABSTRACT 
This is an investigative study to find out relationship between different types of government 
(Di...
inflows from $110 million to $711 million in 1987 to 1997 respectively (Le, 2002), but 
Pakistan is not successful in gain...
10 
CHAPTER 2 
MANDATE: 
To find out what is the relationship between different types of government and FDI/FPI 
patterns ...
11 
CHAPTER 3 
LITERATURE REVIEW: 
A cross border investment by a resident entity in foreign economy with the objective of...
Big and vast markets attract FDI in a country (Honley, 2004). (Zhao and Du, 2007) Found 
that rapid growth in the economy ...
Productive stock, rate of domestic saving and investment tend to increase together with FDI 
inflow (Fry, 1993). 
Foreign ...
Pakistan’s FDI has improved from 141 points in 1990 to 159 points in 2000 (UNCTAD, 
2002). The report revealed that FDI to...
telecom sector fell to $1438.6 million in 2008 against $1824.3 million in 2007 (Zulqernain 
Tariq, 2010). 
Despite global ...
2012). The FPI rose to $96 million in the same quarter as compared to an outflow of $47 
million during corresponding peri...
during corresponding period last year. FPI dropped by 74% to $50 million at the end of third 
quarter (Shahid Iqbal, 2014)...
18 
CHAPTER 4 
METHODOLOGY: 
RESEARCH DESIGN: Exploratory study is undertaken for better understanding of 
mandate. For th...
19 
STUDY SETTING: 
This study is conducted in natural environment. Through field experiment we came to know 
as how type ...
20 
CHAPTER 5 
PHYLOSAPHICAL DISCUSSION 
A. WHY FDI? 
COST AND BENEFITS OF FDI FOR HOST COUNTRY 
a) Resources transfer: 
F...
21 
COST AND BENEFITS OF FPI FOR HOST COUNTRY 
a) In portfolio investment an investor just need to put their money and the...
organizational and managerial skills, marketing know-how and market access which is 
further expected to encourage local e...
from 2.5% in 1950’s to 5.6% in 1960’s. This increase in investment naturally leads to an 
increase in economic growth. 
Du...
disclose the source of their capital. Both local and foreign investors were exempted form 
sales tax and custom duties on ...
On 9 September 2001, Pakistan got the status of front line state because immediately 
after the attacks on World Trade Cen...
 Investment in communication sector; Warid Telecom of U.A.E invested $290 
million, Telenor of Norway invested $2 billion...
between 0 to 5 %. Sales taxes range between 4 to 6 % for unregistered supply chain and 
0 % for registered supply chain of...
28 
6. NAWAZ SHARIF (2013-2014) 
Pakistan under Nawaz, meets most of the essential requirement’s which traders and 
foreig...
29 
CHAPTER 6 
DISCUSSION 
FDI is needed in Pakistan because we need capital resources to grow4. The principle is very 
si...
democracy and foreign investment. This means being a democracy does not help in attracting 
high level of FDI in a country...
31 
Source: Handbook of Statistics on Pakistan Economy & State Bank of Pakistan7 
7 See attachment No. 4 & 5
We can see from the above graph that FDI has increased more under dictatorship rather than 
democracy. The reason for favo...
revolution. Democracy takes time, several decades, sometime even centuries before it is fully 
established. Only then its ...
Currently Pakistan provides investment opportunities in industrial, communication, 
infrastructure, textile and energy sec...
35 
CHAPTER 7 
CONCLUSION 
In the end it is concluded that Dictatorship attracts more Foreign Investment in Pakistan than ...
36 
CHAPTER 8 
RECOMMENDATION 
Pakistan is among the emerging economies of the world so the government should strive hard ...
37 
CHAPTER 9 
BIBLIOGRAPHY 
(Akhtar. (2000). The determinants of foreign direct investment in pkaistan. Lahore journal of...
DAWN NEWS. (2004). Retrieved from http://www.dawn.com/news/365200/fdi-stands-at-949-4m-in- 
38 
2003-04 
DAWN NEWS. (2005,...
39 
Fry. (1993). foreign direct invetsment in southeast asia. 
Gastanaga, Nugent and Pashamova. (1998). Host country refor...
Le and Ataullah. (2006). Foreign Capital and Economic Performance of Pakistan. The Lahore Journal 
40 
of Economy, 1-32. 
...
41 
Presidentmusharraf.wordpress.com. (n.d.). Retrieved from 
http://presidentmusharraf.wordpress.com/2009/03/05/achieveme...
42 
Taha Khan . (2014). DAWN NEWS. Retrieved from 
http://epaper.dawn.com/DetailNews.php?StoryText=14_04_2014_602_003 
The...
43 
CHAPTER 10 
ATTACHMENT 1 (TELEPHONIC INTERVIEW QUESTIONS) 
FDI/FPI PATTERNS IN PAKISTAN 
Date Interviewer 
Time Interv...
44 
ATTACHMENT 2 (TELEPHONIC INTERVIEW ANSWERS) 
1. Mr. Ata Malik 
FDI is needed in Pakistan because we need capital resou...
the world economy should be encouraged. And if any foreign investment that becomes a 
monopoly on our natural resources an...
46 
4. Prof. Yasir Iqbal 
The structure of FDI in Pakistan is different from all over the world. We have seen that 
during...
SECTOR 1996-1997 1997-1998 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-...
48 
ATTACHMENT 4 
FPI INFLOWS IN PAKISTAN DURING 1997-2014 
YEARS FPI 
1996-1997 267.4 
1997-1998 221.3 
1998-1999 27.3 
1...
49 
ATTACHMENT 5 
FDI INFLOWS IN PAKISTAN DURING 1959-2014 (UNDER DICTATORSHIP AND 
DEMOCRACY) 
FDI INFLOWS 
US$ MILLION Y...
Próximos SlideShares
Carregando em…5
×

de

FDI/FPI patterns in Paksitan Slide 1 FDI/FPI patterns in Paksitan Slide 2 FDI/FPI patterns in Paksitan Slide 3 FDI/FPI patterns in Paksitan Slide 4 FDI/FPI patterns in Paksitan Slide 5 FDI/FPI patterns in Paksitan Slide 6 FDI/FPI patterns in Paksitan Slide 7 FDI/FPI patterns in Paksitan Slide 8 FDI/FPI patterns in Paksitan Slide 9 FDI/FPI patterns in Paksitan Slide 10 FDI/FPI patterns in Paksitan Slide 11 FDI/FPI patterns in Paksitan Slide 12 FDI/FPI patterns in Paksitan Slide 13 FDI/FPI patterns in Paksitan Slide 14 FDI/FPI patterns in Paksitan Slide 15 FDI/FPI patterns in Paksitan Slide 16 FDI/FPI patterns in Paksitan Slide 17 FDI/FPI patterns in Paksitan Slide 18 FDI/FPI patterns in Paksitan Slide 19 FDI/FPI patterns in Paksitan Slide 20 FDI/FPI patterns in Paksitan Slide 21 FDI/FPI patterns in Paksitan Slide 22 FDI/FPI patterns in Paksitan Slide 23 FDI/FPI patterns in Paksitan Slide 24 FDI/FPI patterns in Paksitan Slide 25 FDI/FPI patterns in Paksitan Slide 26 FDI/FPI patterns in Paksitan Slide 27 FDI/FPI patterns in Paksitan Slide 28 FDI/FPI patterns in Paksitan Slide 29 FDI/FPI patterns in Paksitan Slide 30 FDI/FPI patterns in Paksitan Slide 31 FDI/FPI patterns in Paksitan Slide 32 FDI/FPI patterns in Paksitan Slide 33 FDI/FPI patterns in Paksitan Slide 34 FDI/FPI patterns in Paksitan Slide 35 FDI/FPI patterns in Paksitan Slide 36 FDI/FPI patterns in Paksitan Slide 37 FDI/FPI patterns in Paksitan Slide 38 FDI/FPI patterns in Paksitan Slide 39 FDI/FPI patterns in Paksitan Slide 40 FDI/FPI patterns in Paksitan Slide 41 FDI/FPI patterns in Paksitan Slide 42 FDI/FPI patterns in Paksitan Slide 43 FDI/FPI patterns in Paksitan Slide 44 FDI/FPI patterns in Paksitan Slide 45 FDI/FPI patterns in Paksitan Slide 46 FDI/FPI patterns in Paksitan Slide 47 FDI/FPI patterns in Paksitan Slide 48 FDI/FPI patterns in Paksitan Slide 49 FDI/FPI patterns in Paksitan Slide 50
Próximos SlideShares
FDI in Pakistan
Avançar

11 gostaram

Compartilhar

FDI/FPI patterns in Paksitan

This is an investigative study to find out relationship between type of Govt. (Dictatorship & Democracy) and FDI/ FPI patterns in Pakistan.

Audiolivros relacionados

Gratuito durante 30 dias do Scribd

Ver tudo

FDI/FPI patterns in Paksitan

  1. 1. 0 THESIS REPORT ON “FDI AND FPI PATTERNS IN PAKISTAN” Session 2012-2014 Neelam Asad G1S12MCOM0010 Section “A” MASTERS OF COMMERCE Punjab College of Commerce University of Central Punjab Lahore, Pakistan
  2. 2. 1 “FDI AND FPI PATTERNS IN PAKISTAN” A THESIS SUBMITTED TO THE PUNJAB COLLEGE OF COMMERCE (UNIVERSITY OF CENTRAL PUNJAB) IN FULFILLMENT OF THE REQUIRMENT FOR THE DEGREE MASTERS IN COMMERCE (ACCOUNTING AND FINANCE) BY Neelam Asad MASTERS OF COMMERCE PUNJAB COLLEGE OF COMMERCE UNIVERSITY OF CENTRAL PUNJAB
  3. 3. 2 RESEARCH COMPLETION CERTIFICATE Certified that the research work contained in this thesis titled “FDI and FPI patterns in Pakistan”, has been carried out and completed by Neelam Asad. G1S12MCOM0010 under my supervision during her Masters of Commerce Principal Date: Punjab College of Commerce University of Central Punjab Research Supervisor: Lahore, Pakistan
  4. 4. 3 CERTIFICATE OF EXAMINERS Certified that the quantum and quality of the research work contained in the thesis titled, "FDI and FPI patterns in Pakistan” adequate for the award of degree of Masters of Commerce. Internal Examiner External Examiner Signature: Signature: Name: Name: Date: Date: Principal Signature: Name: Date:
  5. 5. 4 DECLARATION I, Neelam Asad Registration No. G1S12MCOM0010, student of Masters of Commerce during the session of 2012-2014, hereby declare that the matter printed in the dissertation titled “ FDI and FPI patterns in Pakistan”, is my own work and has not been printed, published and submitted as research work in any form in any university, research institute etc. in Pakistan or abroad. Signature: Name: Neelam Asad Registration: G1S12MCOM0010
  6. 6. 5 DEDICATION This thesis is dedicated to my parents, who have raised me to be the person I am today. You have been with me every step of the way, through good times and bad. Thank you for all the unconditional love, guidance, and support that you have given me, helping me to succeed and instilling in me the confidence that I am capable of doing anything I put my mind to. Thank you for everything.
  7. 7. 6 ACKNOWLEDGEMENT I acknowledge that, it is an excellent while working on thesis research study. As it is a biggest target to do work on the corporate sector. From the formative stages of this thesis, to the final draft, I owe an immense debt of gratitude to my supervisor, Prof. Rehan Ahmad. His sage advice, insightful criticisms, and patient encouragement aided the writing of this thesis in innumerable ways. I would also like to thank my teachers; those steadfast supports of this project was greatly needed and deeply appreciated. I also want to thank my all friends to be being so corporative while I was doing this research report.
  8. 8. 7 Table of Contents CHAPTER 1 ............................................................................................................................. 8 Abstract ........................................................................................................................................ Introduction ............................................................................................................................................. CHAPTER 2 ........................................................................................................................... 10 Mandate........................................................................................................................................ Research questions ................................................................................................................................. Objective.................................................................................................................................................. Significance of study ............................................................................................................................. CHAPTER 3 ........................................................................................................................... 11 Literature review .................................................................................................................................... Trends of FDI/FPI in Pakistan ............................................................................................................. CHAPTER 4 ........................................................................................................................... 18 Methodology ........................................................................................................................................... CHAPTER 5 ........................................................................................................................... 20 Philosophical discussion ........................................................................................................................ FDI in Pakistan under Dictatorship and Democracy ......................................................................... CHAPTER 6 ........................................................................................................................... 29 Discussion ............................................................................................................................................... CHAPTER 7 ........................................................................................................................... 35 Conclusion ............................................................................................................................................... CHAPTER 8 ........................................................................................................................... 36 Recommendation .................................................................................................................................... CHAPTER 9 ........................................................................................................................... 37 Bibliography ............................................................................................................................... 37 CHAPTER 10 ......................................................................................................................... 43 Attachments ............................................................................................................................................
  9. 9. 8 CHAPTER 1 ABSTRACT This is an investigative study to find out relationship between different types of government (Dictatorship & Democracy) and foreign direct investment / foreign portfolio investment patterns in Pakistan. The result shows that foreign investment in Pakistan has increased under dictatorship governments and declined under democratic governments. But it is believed that a country can achieve high foreign inflows if it is democratic. Because democratic government serves collective interests and is considered to be business friendly. KEYWORDS: FDI, FPI, Dictatorship, Democracy INTRODUCTION Capital inflow plays significant role in economic growth especially in developing countries. Capital inflows involve FDI (foreign direct investment), which are in fixed assets and it’s for long term and FPI (foreign portfolio investment) which are in stock market, equity and bonds and it’s for short term. Direct investment and portfolio investment differs in terms of control; in case of FDI the investors have managerial involvement and direct control on their investing capital while in case of FPI they have no managerial involvement and control. Direct investment is considered to be one of the most famous types of investment. Foreign investments are preferred because it creates employment opportunities, enhance products, increases productivity, create competition among local firms and bring advance technology in host country (Kobrin 2005; Le and Ataullah 2006). Many developing countries face the problem of saving and investment gap and this gap can be filled by FDI. Location specific advantages also attract foreign investment in the host country. Therefore investors look for efficiency of resources to get maximum output ( M.Ayub & Umie Habiba, 2013). From 1970’s to the mid of 1980’s the FDI inflows to Pakistan was still at modest. In 1984 the first step towards to the liberalization of FDI policy was taken by giving equal plank to private and public sectors (anwar, 2006). In 1990’s Government of Pakistan reduced tariff and start giving tax incentives and fiscal benefits to attract foreign investors (Aqeel and nishat, 2004). The process of liberalization and privatization helped accelerate the FDI
  10. 10. inflows from $110 million to $711 million in 1987 to 1997 respectively (Le, 2002), but Pakistan is not successful in gaining consistent FDI as compared to India and China (Le and Ataullah, 2006). In 2008 FDI reached to $ 5.4 billion which is 443% higher than 2004. Pakistan is the world’s 6th most populated country with 190 million people (infoplease, 2013), have sufficient stock of natural resources and investment provisions but it’s still unattractive for FDI inflows. Since 2007 FDI is at decreasing trend and the reason behind this decline is global financial crisis (SBP, 2009) the failure of government to augment macro-economic situation, energy sector and arrogant approach towards international investors (Chandran, 2012). Foreign portfolio investment plays significant role in the economic development of a country. FPI improves liquidity position of an economy that helps to improve foreign reserves which ultimately result in stabilized exchange rate. The inflow of portfolio investment affects the credit side and outflow affect the debit side of Balance of Payment account of a country. So FPI can be helpful to reduce deficit Balance of Payment. The countries where poor governance environment exist there tend to be less FPI inflows, because that countries lack mutual trust, reliable public information and less transparent operations of companies (Huang, 2003). FPI came in Pakistan in early 1990’s when Government of Pakistan started implementing liberalization policies. Pakistan was among the first emerging economies to open up its stock markets to foreign investors. But unfortunately due to underdevelopment of overall financial system, lack of liquidity in the security market and presence of enormous information (Asymmetric Information), FPI has not played key role in economic growth and development of Pakistan. FPI reach the peak level of $1000 million in 1994 however according to (Khan, 1996) this increase is because of $862 million sale of PTC vouchers. Then in 2006-2007 FPI was $1820.4 million showing 517.8% increase as compared to $351.5 million in 2005-2006. 9
  11. 11. 10 CHAPTER 2 MANDATE: To find out what is the relationship between different types of government and FDI/FPI patterns in Pakistan. RESEARCH QUESTIONS:  Is there is any relationship between type of government (Dictatorship / Democracy) and Foreign Direct Investment / Foreign Portfolio Investment patterns in Pakistan?  Which sector has received highest FDI in the country from 1997 to 2014?  What further steps are taken to attract Foreign Investment in future? RESEARCH OBJECTIVES: The objective of this study was:  To find out relationship between type of government and FDI/FPI patterns in Pakistan,  To find out which sector received maximum FDI in the country from 1997 to 2014,  And what steps are to be taken to promote foreign investments in future. SIGNIFICANCE OF STUDY: This study will unveil that whether different government affects FDI/FPI inflows or not. Now a day’s foreign investment is considered to be important source of economic growth and capital formation for developing countries. Foreign investment not only covers saving and investment gap but also brings technology, employment opportunities, management techniques etc. For nations like Pakistan that are under heavy foreign debts foreign investment is fruitful because it’s free from debt liability and interest charges. Despite of inborn difficulties and inhospitable investment environment, Pakistan is needed to attract foreign investment in order to boost the sagging state of Pakistan’s economy.
  12. 12. 11 CHAPTER 3 LITERATURE REVIEW: A cross border investment by a resident entity in foreign economy with the objective of achieving lasting interest in host economy is known as FDI (OECD International Investment). The entry of funds into a country where stocks and bonds are purchased by foreign investors is known as FPI (OECD International Investment). FDI inflows are more stable than FPI (Sarno and Taylor1999, world bank 1999, sula and willett). FDI is preferred over foreign Aid (by IMF and the World Bank), as it is considered to be important source that supports development process, planning and programming by developing economy in 21st century (UNCTAD, 2011) The major difference between direct and indirect investment is control, if an investor has 10% or more shares of a firm then it is direct investment (Ball, McCulloch & Hills (2003). (La porta and Vishny, 1998) Finds in their studies that a country that provides better legal protection to investors tend to have active stock market. A country attracts more FDI where protection of property rights and transparent legal system are available (Globerman and Shapiro, 2003). (Itay and Razin, 2005) Study shows that a country where agency problems between managers and investors exist tends to attract FDI rather than FPI. Democracy promotes high foreign direct inflows by insuring contract enforcement and by providing property rights protection, said (Li & Resnick ; jensen, 2003). (Greider, O'Donnell & Haggard, 2009) Said autocracy attracts more FDI by providing repress against protestors, by suppressing labour demands and by offering tax incentives. (Benhua, 2007) Study concluded that there is no systematic relationship between FDI inflows and democracy. Direct investment is considered to be dominant source of economic growth in developing as well as in developed countries (world develpoment report , 2011). To increase foreign capital inflow trade liberalisation and investment regimes are needed. This can be achieved by relaxing controls and when trade incentives are offered by host country (Zaidi, 2004). To ensure domestic economic activities are stimulating the host country should make it mandatory for foreign investors to use a certain amount of host country raw material in the production of final goods (Zaidi, 2004).
  13. 13. Big and vast markets attract FDI in a country (Honley, 2004). (Zhao and Du, 2007) Found that rapid growth in the economy increases per capita income that increases purchasing power of the people which results in high demand for goods and services. Therefore big market size attracts more foreign investment in a country. Investment promotion agencies also play vital role in attracting FDI in an economy. Such IPSs strengthens investment seeking economies by enriching them with information- content, which is then available to foreign investors (DAWN, 2002). Determinants like political instability, weakness of economy and law and order are the reasons behind low FDI in Pakistan (Ashfaque, 1997). Political freedom promotes investment in a country while political instability negatively effects the investment. (YI, Feng, 2001). Negative relationship is found between political strikes/ riots in host country and flow of FDI (Schneidr and B. Frey, 1985). (Quazi and Mahmud, 2004)Found that human capital increases FDI while bad political conditions have negative effect on FDI. Political instability has been a frequent phenomenon in Pakistan (Akhtar, 2000). (Poon, 2000)MNCs seek stable and safer environment to minimize their risk. Hurdles in the way of FDI inflows that are identified by (Jones and R.Golov, 2000) are: bad culture and political system, non-supportive legal and taxation system, corruption and high rate of crime and non-effective markets of host country ( M.Ayub & Umie Habiba, 2013). (Gastanaga, Nugent and Pashamova, 1998) Found that corporate tax rates and economy openness were the determinants of FDI in Pakistan. Domestic economic conditions are the main reasons behind capital inflows (M.susan, 1999). ( J.C.Stein & Froot,K.A , 1991)Studies that when a country’s currency is devaluated it results in reduction of production cost and when it is measured in foreign currency it results in increased foreign investment inflow which cause foreign investor wealth to grow. Some economists are of the same view that domestic activity of host country can be stimulated by FDI (Awan.Khan,Brooks & Sumulong, 2012). FDI increases the efficiency of domestic capital by increasing its proper allocation across firm (Razin and Sadka, 2002). (Razin, 2002) Find out that the effect of direct investment on domestic investment is larger than loan inflows or indirect investment. (Goldenstein and Razin, 2006) Found in his study that FDI provide greater return as it gives control and ownership and is managed efficiently than FPI which is managed by outside parties. 12
  14. 14. Productive stock, rate of domestic saving and investment tend to increase together with FDI inflow (Fry, 1993). Foreign direct investment increases domestic production and economic growth and reduces imports of host country (Vernon). (Blomstrom) Penned down in his research that FDI had positive impact on economy in high income countries but in case of low income countries it is not beneficial because of low level of education and inefficient labour force. (Ozawa and Castello) They concluded in their study that host government should provide ownership advantage to investing firm and should take location advantage. This will result in business expansion and economic growth, which helps in filling development gaps but on the other hand host country could lose its cultural identity. (Khan and Nawaz, 2010) Study shows that there is a positive relationship between GDP and FDI inflows in a country. Through FDI technology is transferred to developing countries as the lack necessary infrastructure. (Sanchez-Robles 2002 and Adams 2009). FDI contributes to capital accumulation and factor productivity (Nath, 2005). Better management practices are used by foreign investors which increase labour productivity, bring knowledge and train labours in host country (Mello, 1997). 13 TRENDS OF FDI / FPI IN PAKISTAN The size of foreign inflows shows the success of FDI policies, that are privatization deregulation and liberalization policies implemented at the end of 1980’s. FDI during 1997- 1998 was $601.3 million. FPI in 1997 and 1998 was $47.3 and $28.6 million respectively. FPI witnessed an outflow of $57.1 million in 2001 as compared to an outflow of $67.4 million in 2000 (le and Ataullah, 2006). Foreign direct investment has increased by 58% to $161.60 million in July November against $202.40 million last year (DAWN NEWS, 2001). Pakistan attracted $287.4 million FDI in the first nine months of fiscal year 2002 against the target of $355 million for the entire fiscal year ( Mohiuddin Aazim, 2002). Meanwhile the aggregate FDI in SAARC region was estimated $2.03 billion, in which Pakistan secured $308 million.
  15. 15. Pakistan’s FDI has improved from 141 points in 1990 to 159 points in 2000 (UNCTAD, 2002). The report revealed that FDI to Pakistan has reduced from $530 million in 1999 to $305 million in 2000 and improved to $385 million in 2001. During 2000-2001 and 2001-2002, Pakistan got FDI worth $484.7 million and $798 million respectively ( Mohiuddin Aazim, 2002) . In the world ranking of 140 countries Pakistan got 114th position in terms of investment potential and performance. 65% higher FDI $798 million is received by Pakistan in 2001-2002. The increase in FDI can be attributed to the restoration of democracy and political stability in the country. This shows that perception about investment in Pakistan is improving (DAWN NEWS, 2003). The repudiation of independent power producers (IPPs) agreement by Nawaz government affected foreign investors’ confidence in Pakistan. After this the sudden freezing of foreign currency accounts following the economic restrictions by several countries resulted from Pakistan decision to go nuclear in 1998 reduces FDI inflows in the country (DAWN NEWS, 2004). Red tapism, political instability, unsatisfactory law and order situation are major hurdles in attracting foreign investment in Pakistan (Dawn News , 2004). FDI stood at $949.4 million which was 19% higher than last year 2002-2003, but falling approximately $50 million short of $1 billion target set for the FY 2003-2004 (DAWN NEWS, 2004). FDI is up by 129% $119.6 million against $52.2 million in the corresponding last year (Khaleeq, 2005). Pakistan attracted highest FDI of $1.5 billion (exactly $1523.9 million) in 2004-2005 as compared to $949.4 million in 2003-2004. The country also received portfolio investment of $152.6 million this year said Waseem Haqqie, Chairman Board of Investment (DAWN NEWS, 2005). Foreign direct investment reaches to $1.974 billion the inflow is 190% higher than the inflow in the same period of last year. The subscription of $800 million Eurobond was encouraging factor for the market and it helped to minimize the fear of exchange rate (Iqbal, 2006) Pakistan’s FDI increased by 95% in 2005 and touched $2 billion, while the outflow fell to $44 million states World Investment Report 2006 (Syed, 2006). Despite high risk profile, discouraging economic and political factors FDI reached to $3.481 billion in first 8 months of 2007-08 (Shahid Iqbal, 2008). According to PTA the FDI in 14
  16. 16. telecom sector fell to $1438.6 million in 2008 against $1824.3 million in 2007 (Zulqernain Tariq, 2010). Despite global financial crises, foreign investors still find Pakistan attractive for foreign investment. The inflow of FDI reached $2.588 billion and is 1.3% higher as compared to corresponding period last year (DAWN NEWS, 2009) In 2008-09 Pakistan attracted huge FDI while FPI witnessed massive outflow. FDI fall by 41.6% at $200.1 million in July 2009 as compared to $342.5 million last year. The net outflow of FPI was $1.053 billion and net inflow was $96.4 million. Analysts believe global recession makes Pakistan more attractive as the country received less impact as compared to other country especially developed countries. The inflow of $11 billion IMF loan helps in stabilizing the exchange rate which will attract more foreign investment (Shahid Iqbal, 2009). FDI fell by 57% on the other hand FPI witnessed an encouraging recovery of 134% which is a positive sign (DAWN NEWS, 2009). Power shortage and poor law and order were the main hindrance for growth in foreign investment. The country witnessed sharp decline in FDI by 46%. The FDI fell to $98.5 million in July as compared to $182 million in the same period last year. FPI in fiscal year 2011 actually dropped by 44.6% to $173 million against $311 million during fiscal year 2010 (DAWN NEWS, 2010). The foreign inflow declined by 14.5% to $828.5 million in July- December against $968.9 million received during the same period last year. While the Portfolio investment decline by 25%. “The poor FDI reflects the deteriorating law and order situation of the country both foreign and domestic investors require political and economic stability” said Muhammad Imran, a researcher on investment (DAWN NEWS, 2011). Inflow of FDI in South Asia has increased by 23%, Pakistan has emerged as third largest country in the region with $1.3 billion FDI inflow in 2011, says World Investment Report 2012 (DAWN NEWS, 2012). FDI fell by 67% to $87 million during July-September of 2012-2013 as compared to $263 million the same period last year (DAWN NEWS, 2012), with expert blaming the fall on poor economic management, energy shortage and persistent terrorism (DAWN NEWS, 15
  17. 17. 2012). The FPI rose to $96 million in the same quarter as compared to an outflow of $47 million during corresponding period last year. This year most of the sectors registered outflow including the most popular telecommunication sector, the only attraction for foreign investor is the oil and gas exploration which succeeded to receive an investment (DAWN NEWS, 2012). Pakistan’s FDI witnessed a steep decline in last five years, from $5.5 billion in 2008 to $760 million in 2012 (Shaid Iqbal, 2013). The FDI inflow during July- February was $1billion and outflow was $900 million, showing decline of 9.7% (DAWN NEWS, 2013). The highest outflow was noted in telecommunication and chemicals. Sectors like food packing and power lost their charm for investors (Shahid Iqbal, 2013). The FDI rose by 3.9% to $622 million in July- April. However the size of FDI was still poor when compared with inflows five year ago. FPI shows increase of 59% to $820 million during the same period. With the election of new government, it is expected that improved law and order situation will boost economy and attract foreign investment (Shaid Iqbal, 2013) Net FDI reaches $1.447 billion showing 76% increase as compared to previous year (DAWN NEWS, 2013). FDI increased by 101.2% to $105.4 million in the first two months (July-August) of FY 2013-2014 as compared to $52.4 million during corresponding period last year (DAWN NEWS, 2013). Like previous year telecommunication witnessed outflow while oil and gas exploration remained at the top of list for foreign investors (Shahid Iqbal, 2013). FPI dropped during the first quarter by 59% to $38.8 million as compared to $96 million during previous year (DAWN NEWS, 2013). At the end of 2013 FDI increased by only 4.7 % (to $330.7 million as compared to $315.8 million last year) and decline by 26% (to $47.1 million as compared to $63.7 million last year). The situation was dismal in FPI which was just $0.6 million during last five months as compared to $144 million in the corresponding period last year (Shahid Iqbal, 2013). According to the industry players, Nawaz government that is believed to be business friendly also fails to attract foreign investors (Daily Times, 2013). After the recent auction of $2 billion Eurobond (10-04-2014) the stock market is up by 6% in April. Net foreign portfolio investment touched $49 million in just 9 days of this month (Taha Khan 2014). The volume of FDI was $670 million (July-March) as compared to $731 million 16
  18. 18. during corresponding period last year. FPI dropped by 74% to $50 million at the end of third quarter (Shahid Iqbal, 2014). 17
  19. 19. 18 CHAPTER 4 METHODOLOGY: RESEARCH DESIGN: Exploratory study is undertaken for better understanding of mandate. For this purpose case studies are used as research strategy. Unit of analysis is government and organization. RESEARCH POPULATION: 1. Government which make policies regarding foreign investments Ayub khan 1958-1969 Zia-ul haq 1977-1988 Nawaz Sharif 17 Feb 1997 to 12 Oct 1999 2013 to continue……. Zafar ullah Khan Jamali Shaukat Aziz 21-Nov-2002 to 26-Jun-2004 29 August 2004 to16 November 2007 Syed Yousaf Raza Gillani Raja Pervaiz Ashraf 25 March 2008 to 26 April 2012 22 June 2012 to 25 march 2013 (insider.pk) 2. Private or public organization (foreign FDI) 3. Individual investors (FPI) TIME FRAME: This is a cross sectional study. Data is collected just once to answer the mandate. SAMPLING TECHNIQUE: Responses are collected from members of targeted population who are conveniently available to provide it and who are expert in their field.
  20. 20. 19 STUDY SETTING: This study is conducted in natural environment. Through field experiment we came to know as how type of government (dictatorship, democracy) affects FDI/FPI patterns in Pakistan. SAMPLE SIZE: Sample size includes types of governments ruled in the past. Ayub Khan Dictatorship Zia-u-Haq Dictatorship Nawaz Sharif Democracy Zafar ullah khan Jamali Dictatorship Shaukat Aziz Syed Yousaf Raza Gillani Raja Pervaiz Ashraf Democracy Nawaz Sharif Democracy RESEARCH INSTRUMENT Research instrument used in this report is interview1. Beg DATA COLLECTION METHOD Without becoming part of any organization or any system data is collected that is related to mandate. Moreover telephonic interviews were also conducted. 1 See attachment No. 1
  21. 21. 20 CHAPTER 5 PHYLOSAPHICAL DISCUSSION A. WHY FDI? COST AND BENEFITS OF FDI FOR HOST COUNTRY a) Resources transfer: FDI positively contributes to host country by supplying foreign capital, latest technology that might not be available in host country and managerial techniques. These resources stimulate the economic growth of host country. b) Employment creation: FDI effects employment in both direct and indirect manner. Direct effect arises when multinational company employs number of locals, and indirect effect arises when jobs are created in supporting industries. c) Balance of payment: There are three ways in which FDI affects Balance of Payment. First, the initial capital inflows by investing company. Second, FDI serves as substitute for imports in the host country. Third, when foreign company exports goods and services to other countries. d) Promote competition: According to OECD report the presence of foreign companies help in economic development by increasing competition among local competitors which results in high productivity, low prices and more efficient resources allocation. e) Adverse effect on competition: The foreign companies that are rich in technology can drive indigenous companies out of the business and gain state of monopoly f) Adverse effects on balance of payment: Adverse effects arise first, when foreign companies transfer earning to its parent company and second, when foreign companies import raw materials from abroad. Such outflows result as a debit on the current account of host country’s Balance of Payment.
  22. 22. 21 COST AND BENEFITS OF FPI FOR HOST COUNTRY a) In portfolio investment an investor just need to put their money and they have to face no hassles of talking to all those inefficient government and non- government actives, which a direct investors have to face. And therefore the opportunity cost of portfolio investment is far blessed then the opportunity cost of foreign direct investment2. b) Foreign portfolio investment can bring discipline and know-how in capital market. It can also increase liquidity of domestic capital market and can develop market efficiency. c) The inflows of portfolio investment results in inflow of sophisticated instruments and technology for managing portfolios. d) The way these stock markets work money coming and out is so quick. So this un-redialled concept of taking away profits (when no restrictions are imposed on remittance of dividends and capital gains) it will be of no advantage to the host country3. B. FOREIGN DIRECT INVESTMENT vs. LOCAL INVESTMENT Foreign Direct Investment is considered as an important source of technology and organizational innovation. According to (Caves, 1974; Blomstom, 1989; Blomstrom and Kokko, 1998)) FDI increases productivity of local firms as knowledge is transferred from parent firm to foreign affiliates which then leaks out to the host country’s markets. The impact of FDI on local investment is not clear because it depends on the motive behind such investment. One motive is to remove trade barriers in the host country; this kind of investment does not result in growth of local investment. The other motive is comparative advantage; this kind of investment helps in accelerating economic growth of local investment. An increase of a dollar in capital inflows (Direct investment, indirect investment and financial inflows e.g. bank loans) is associated with an increase in local investment of about fifty cents. But in case of foreign direct investment it brings about close to one for one increase in local investment concluded (Bosworth and Collins, 1999). (Ghazali, 2010) Research finding shows that FDI plays a vital role in complementing local investment in Pakistan, the larger the FDI the greater the local investment. Moreover FDI enhances local investment through more advanced production techniques, improved 2 See attachment No. 2, Interview answer # 3 3 See attachment No. 2, Interview answer # 3
  23. 23. organizational and managerial skills, marketing know-how and market access which is further expected to encourage local entrepreneurship. C. GOVERNMENT POLICIES FOR FOREIGN AND LOCAL 22 INVESTORS Pakistan has the most liberal investment policy in the South Asian region. In Pakistan, foreign and local investors can directly invest in every sector and there are no restrictions on bringing in and taking out amount invested. The investment policy of Pakistan offer guarantees of equal treatment to both local and foreign investors. The foreign investment in Pakistan is fully protected through Foreign Private Investment Act, 1976; and Protection of Economic Reforms Act, 1992. The minimum share of the local (Pakistani) partner in a joint venture is 60:40 for the services sector while there is no minimum limit in case of manufacturing sector. Foreign investors are permitted to hold equity up to 100%, moreover attractive incentive packages are offered and remittance of capital, profits, royalty, technical and franchise fee is allowed (Zallp). A foreign company does not require any approval from Board of Investment. The Federal Board of Revenue is not concerned with the source of the funds; they are only concerned whether the investors have paid Income Tax or not (Masood). FDI IN PAKISTAN UNDER DICTATORSHIP & DEMOCRACY 1. AYUB KHAN (1958-1969) On 29 October, Ayub khan became the first military dictator of Pakistan. Ayub Khan’s Era is considered to be the “Decade of Development”. Pakistan was the first country that supported USA during Korean War. Khan allied Pakistan with U.S.A military against Soviet Union. This in turn led to major economic aid form U.S (round about $800 million was received by Pakistan during 1960-1965) and European nations resulting in rapid growth in the economy. On the other hand, Private investment was encouraged by relaxing direct economic controls on trade, and earmarking of foreign credit resources for the private sector through long term credit agencies. This relaxation resulted in double foreign investment
  24. 24. from 2.5% in 1950’s to 5.6% in 1960’s. This increase in investment naturally leads to an increase in economic growth. During 1960 -1965 there was a dramatic U-turn in investment and growth; this was the result of Khan’s strong commitment to development. That is why Ayub khan period is also known as “The Golden Sixties”. This development momentum was seriously disrupted by the war with India in 1965 which resulted in reduced foreign aid and investment. 23 2. ZIA-UL-HAQ (1977-1988) The Zia ul haq era was marked by the second economic revolution after Ayub Khan’s. First Zia participated in Vietnam War and then he participated in the U.S campaign to overthrow the Soviet Union in Afghanistan which resulted in large amount of economic assistance in Pakistan ($5 billion after 1982, making Pakistan 3rd largest recipient of US aid in the 1980’s). Zia’s period was also characterized by rapid economic growth as large number of capital inflows was received for U.S and other western countries following the Soviet Invasion of Afghanistan. Zia’s era is also known as “The Revivalist Eighties”. The aim of Haq’s govt. was to restore confidence in the private sector, the relevant policies include denationalization, Protection of rights of foreign investors, setting up of EPZs, fiscal and other incentives (like Tax holidays reduced Income taxes and import duties). Private investment increased from 33 % in 1980 to 46% in 1989. According to an estimate foreign investors have invested PRs. 10.81 billion in Pakistan out of which PRs.1.99 billion was invested by American companies. 3. NAWAZ SHARIF (1997-1999) In November 1997, Nawaz government launched new investment policy. The aim of that policy was to improve business environment and to open new sectors for foreign investment. Until 1997 only manufacturing sector was opened for foreign investment however, the new policy opened other sectors like infrastructure, agriculture, wholesale and retail trading housing and real estate, health and education (The Economist Intelligence Unit, 1997). Furthermore, extended tax and tariff concessions were awarded to foreign investors in these sectors. Further, foreign investors were offered liberty not to
  25. 25. disclose the source of their capital. Both local and foreign investors were exempted form sales tax and custom duties on imports of machinery (not manufacturing in Pakistan). It was expected that as a result of this policy the government will attract $5 billion private foreign investment in three years. The total foreign investment during FY 1997 was $682.1 million, showing a decrease of 61.9 % as compared to $1.1 billion last year. (Eeconomist Intelligence Unit, 1998). Despite all the efforts of Nawaz govt, foreign investors did not respond to the incentives that are offered to attract them. The reasons behind low FDI in Pakistan were: First, Nawaz attack on Independent Power Producers (IPPs) and criminal action was initiated against Hubco. Second, that has major impact on FDI was the nuclear test on May 1998. Following the test all the domestic and foreign exchange accounts were frozen by the Nawaz government. Third, the 1999 “Kargil crises” between India and Pakistan. The foreign investors had to put their investment decisions on hold because of the environment instability caused by the Kargil crisis (Cheema, 2004). The total foreign direct investment during FY 1999 was just $472.3 million as compared to $601.3 million in FY 1998. The 90’s had been characterized as “a lost decade” because of growing burden of debts, lowering growth rate, high rate of inflation and political instability (nine different governments ruled Pakistan in this period). The economic sanctions following the nuclear test in 1998, IPPs dispute, economic mismanagement and corruption by Nawaz government in 1993 and Benazir government in 1996 were the causes behind poor performance of the 1990’s. All these factors adversely affected the investment climate in the country. The failure of successive government to implement the agreements by previous governments led to the loss of credibility among the International Financial Community, which results in withdrawal of foreign economic assistance and outflow of foreign investment. 24 4. PERVEZ MUSHARRAF (1999-2007) General Pervez Musharraf successfully tackled the crisis of Nawaz government to attract foreign investment in the country. The Hub Power Company dispute was successfully resolved in early 2001. This was a welcome step, and since then foreign investment inflows has increased in the country.
  26. 26. On 9 September 2001, Pakistan got the status of front line state because immediately after the attacks on World Trade Centre, the U.S government approached Pakistan and presented stark choices. Pakistan had to make common cause with US in its war against terrorism or to persist with its pro-Taliban Afghan policy and live with isolation from rest of the world (musharraff). Musharraf gave green signal and did an effective job of realigning Pakistan with U.S policies (News, 2001). The President of United states, Bush without wasting any time announced the reward for Pakistan for the corporation. And in the very next week the sanctions related to May 1998 Nuclear Blast of 10 October, 1999 were lifted, and announced foreign aid of $1 billion.US also announced the actual and budgeted amount of Aid of $5.174 billion during the period of 2001-2008. And according to an estimate an additional $800- $100 million was given each month in coalition support fund (a total of $4.75 billion until August 2006) ( Rehana Saeed Hashmi). Pakistan globally ranked 10th among the most active in perusing pro-business policies. In terms of foreign Direct Investment, Musharraf had proven himself to be the manager of Pakistan. Foreign direct investment during FY 2002 was $357.3 as compared to $322.4 million in FY2001. The multinational corporations were provided excellent opportunities like bringing in the required capital, latest technology, developed human resource and management. All sectors were opened for foreign investment, foreign investors were allowed to hold 100 % ownership, and there were no restrictions on remittance of profits, dividends and repatriation of capital. He started tax free industrialization to attract foreign investors ( Rehana Saeed Hashmi). In Musharraf’s era number of multinational companies launched in Pakistan like:  Dubai Port world invested $10 billion to develop real estate, infrastructure and 25 transport in Pakistan.  The Chinese Petroleum Chamber invested $12 billion for the ‘Oil’ City project.  Capital Investment Overseas, an Abu Dhabi based company invested Dh 1.25 billion to build a five-star hotel in Lahore.  Mid Roc Tussonia (a Saudi- Kuwait joint venture), will invest $3 to $4 billion in power generation, refining and real estate in Pakistan.
  27. 27.  Investment in communication sector; Warid Telecom of U.A.E invested $290 million, Telenor of Norway invested $2 billion, china mobile of china invested $860 million.  Daewoo International, a transport equipment company of Korea invested $229 26 million in Pakistan.  Noor Finl Invested KSCC merges with Meezan Bank Ltd an invested $38.1 million in financial sector of Pakistan. Source: (musharrafsupporters.wordpress.com) The sound economic policies of Musharraf revive microeconomic stability in the country, which led to improvement in credibility among international donors and restored foreign investor’s confidence. Consequently foreign investment increased in Pakistan (Cheema, 2004). The total FDI during 11 years (1988-1999) was $4.87 billion, and during 8 years of Musharraf FDI registered enormous growth $13.195 billion at the end of 2007. Investment as %age of GDP rose from 17.4% to 22.9 % in 8 years. Foreign investment rose from $0.5 billion to $8 billion, a 17 fold increase in 8 years which reflects the growing confidence of foreign investors on Pakistan (Presidentmusharraf.wordpress.com). Karachi Stock market emerged as one of the best stock exchanges in the emerging economies. Rising from 1257 points in October 1999 to 13998 in November 2007, an 11 times increase in 8 years (Presidentmusharraf.wordpress.com). Foreign portfolio investment stood at $1820.4 billion in FY 2007 as compared to $27.3 million in FY 1999. FDI inflow to Pakistan started to uplift from 2005 to 2008, but after the military operations against the militants a sharp decline could be seen because of the instability created by the terrorist attacks (Nadia Mushtaq , 2013). 5. ASIF ALI ZARDARI (2008-2013) Zardari’s government provided all the incentive, facilities and concessions to both domestic and foreign investors. Full repatriation of capital, gains, dividends and profits are allowed, no minimum or maximum requirement for investment (Brecorder, 2012). Custom duties on imported machinery by manufacturing and social service sectors range
  28. 28. between 0 to 5 %. Sales taxes range between 4 to 6 % for unregistered supply chain and 0 % for registered supply chain of textile, surgical, sports, and carpet sector. There were no restrictions imposed on transfer of technology moreover, Foreign investors were allowed to sign technical contracts with local investors (Investmenst Climate Statement- Pakistan, 2012). The multinational companies that have invested in Pakistan were:  Wartsila, of Finland had invested $666 million and Xenel industries of Saudi 27 Arabia have invested $659 million in power sector of Pakistan.  Dubai Islamic Bank of U.A.E invested $448 million in financial sector of Pakistan.  Glaxo Smith Kline, a Pharmaceutical company of United Kingdom merge with Bristol-Myers Squibb of Pakistan and invested $36.7 million.  MOL of Hungary invested $40 million and OMV of Austria invested $112 million in oil and gas sector of Pakistan.  British petroleum, Orient petroleum and Occidental petroleum invested $37.42 million, $37.42 million and $34.32 million respectively (Investment climate in pakistan, 2012). Besides offering these incentive foreign direct investment was continuously declining. It stood at $3719.7 billion in FY 2009 and $1634.6 billion in FY 2010. The reasons behind falling in foreign investment were: inconsistence policies, security problems, bad governance and microeconomic and political instability. No practical efforts were made by Zardari’s government to overcome these problems to attract FDI (Mohammad Arifeen, 2013). According to Global Competitiveness Report of 2011-2012 “Pakistan standing was not encouraging when it comes to macroeconomic environment, infrastructure facilities, quality of institutions and political risk, which are important determinants for foreign direct investment” (pmln.org, 2013). Taliban insurgency in the northwest and chronic power shortage put off investor’s confidence. The total FDI during FY 2012 was $820.7 million as compared to $1634.8 billion in FY 2011. The performance of Pakistan’s equity market was encouraging in terms of attracting foreign portfolio investment. The portfolio investment at Karachi Stock Exchange stood at $587.9 million during FY 2010, while it was -$510.3 million in FY 2009. In FY 2011 FPI were $364.6 million, and -$60 million in FY 2012.
  29. 29. 28 6. NAWAZ SHARIF (2013-2014) Pakistan under Nawaz, meets most of the essential requirement’s which traders and foreign investors seek for that includes: macroeconomic stability, sophisticated financial sector, liberalized trade and investment regime, low production cost and easy access to policy makers. Besides offering these incentive foreign direct investment was continuously declining. It stood at $3719.7 billion in FY 2009 and $1634.6 billion in FY 2010. The reasons behind falling in foreign investment were: inconsistence policies, security problems, bad governance and microeconomic and political instability. No practical efforts were made by Nawaz’s government to overcome these problems to attract FDI (DAWN NEWS, 2013). FDI in Pakistan has shrunk to 27 % in November 2013 under Nawaz government whereas it was 54% in November 2012 during Zardari government. Same in case of FPI it went negative figure of $72.8 million in of November 2013 as against $18.2 million in November 2012. The Nawaz government which was believed to be business friendly has also failed in providing relief to business community said President Dr. Shinail Daud Arain Rawalpindi Chamber of Commerce (RCCI) (Israr Ahmad , 2013). Foreign Direct Investment slightly increased by 6 % but the volume of investment is still negligible while FPI dropped by 74 % to $50 million at the end of third quarter FY 2014. The government is trying really hard to attract foreign investment. The foreign investors show strong desire to invest in recently lunched Euro bonds by Pakistan. The reason behind very large investment in Eurobond was very high rate of return (almost double than many weak economics). Despite offers by the government the foreign investors are not ready to land in Pakistan and the reason is simple: “the country is still not safe for foreigners, said analyst” (Shaid Iqbal, 2014).
  30. 30. 29 CHAPTER 6 DISCUSSION FDI is needed in Pakistan because we need capital resources to grow4. The principle is very simple and the principle is cost and benefits analysis. If the overall cost of a foreign investment is more than the overall benefits then it should not be encouraged and vice versa5. So any foreign investment that enhances our skills, our quality of product, increase competition in local market and brings us closer to the world economy should be encouraged. And if any foreign investment that becomes a monopoly on our natural resources and assets should be discouraged6. It is often said that FDI increases under democratic government because democratic government provides property rights protection. Since there is no guarantee that democratic government will not violate property protection (North & Weingast , 1989). Democratic government is considered to decrease political risks and have been found credible in making agreements (Cowhey 1993; Fearon 1994;). Political risks include contract repudiation, expropriation and nationalization (North & Weingast , 1989). On the contrary, a number of authors said that dictators attract more FDI inflows. Dictators protect foreign investor from high wages and taxation (Donnell, 1978) and to the extent property rights protection is positively related with FDI inflows, stable dictatorship government win high level of FDI (Olson,1993). Multinational corporations prefer to invest in dictator administration, because dictators can provide better entry deals and low wage rate. This relationship leads to high levels of FDI in countries where dictators rule. It is also assumed that dictators are good at bargaining with multinational firms, and the lack of constraints in taking decisions creates more generous situations for multinationals (Nathan M. Jensen, 2003). The constraints impose in democratic governments may limit the amount of discretion in offering deals to multinationals. This limited discretion can provide benefits to multinational corporations. These constraints lead to policy stability and favourable policies toward multinationals (Nathan M. Jensen, 2003). There is no evidence of relationship between 4 See attachment No. 2, Interview answer # 1 5 See attachment No. 2, Interview answer # 3 6 See attachment No. 2, Interview answer # 3
  31. 31. democracy and foreign investment. This means being a democracy does not help in attracting high level of FDI in a country (Benhua Yang, 2007). 30
  32. 32. 31 Source: Handbook of Statistics on Pakistan Economy & State Bank of Pakistan7 7 See attachment No. 4 & 5
  33. 33. We can see from the above graph that FDI has increased more under dictatorship rather than democracy. The reason for favouring dictatorship is first stability. The investor’s confidence is developed on stability (in policy making). And in Pakistan it is experienced that policies are stable under dictatorship. Because decision maker is only one and parliament is not involved so you don’t need any bill to be approved. On the other hand under democracy you need approvals at multiple levels that cause delay of process that’s why stability is found under dictatorship8. The other reason behind high FDI under dictatorship is that whenever military government rule Pakistan, Pakistan involves itself with America against on-going War. Ayub khan participated in Korean War, Zia-ul-haq in first Vietnam War and then the afghan War against the Soviet Union and when Musharraf came to power he involved Pakistan in War against Taliban after 9/11, which results in high foreign investment inflows9. Despite all the criticism of Musharraf’s policies and personality it was his over- arching policy of deregulation, privatization and liberalisation that Pakistan has received $5 billion FDI in 2007, which is ten times the figure of 2001. It was Musharraf’s economic policies that were kept unchanged or with minor changes that boosted the confidence of both local and foreign investors (Shaid Iqbal, 2007) . The stock exchange under Musharraf’s administration has been the best performing stock market among the Asia’s emerging economies. The KSE- 100 which was launched in 1991 with base price of 1000 points reached to 13772 points in the first quarter of FY 2007-2008 (Fazl-e-Haider, 2008). If foreign investment really grows under dictatorship than still why democracy is favourable for Pakistan? It is said that “during military government every country makes progress economically but travels downward morally”. To achieve macroeconomic stability, Pakistan must become politically stable by strengthening its institutions of democracy. No doubt that Pakistan has received high foreign investments under dictatorship but it is not possible to attract high FDI without stable political system. Economists believe that a country can achieve high foreign inflows if it is democratic. Because democratic government serves collective interests and is considered to be business friendly. That is why democracy is favourable for foreign investment and economic growth in Pakistan. Democracy fails because of its short life in Pakistan. Democracy is a process not a 32 8 See attachment No. 2, Interview answer # 2 9 See attachment No. 2, Interview answer # 3
  34. 34. revolution. Democracy takes time, several decades, sometime even centuries before it is fully established. Only then its full benefits are realised. 33 MOST ATTRACTIVE SECTORS IN PAKISTAN (1997-2014)10 Source: Board of Investment, Pakistan11 The sectors that remained most attractive during 1997 to 2014 were: SECTORS TOTAL ($US MILLION) % Oil and Gas 6160.2 22.5 Financial Business 5564.2 20.4 Textiles 423.3 1.5 Trade 1018.3 3.7 Construction 900.0 3.3 Power 1328.9 4.9 Chemical 1078.5 3.9 Transport 754.8 2.8 Communication (IT & Telecom) 6545.0 23.9 Other 6210.4 22.7 Total including Pvt. Proceeds 30135.6 110.3 Privatisation Proceeds 2805.1 10.3 FDI Excluding Pvt. Proceeds 27330.5 100 10 Objective # 2, See chapter No. 2 11 See attachment No. 3
  35. 35. Currently Pakistan provides investment opportunities in industrial, communication, infrastructure, textile and energy sector (ePakistan, 2014). Its location as a regional hub makes it a very attractive place for foreign investment and business. The top five investing countries in Pakistan are: U.S.A with $6987.7, U.K with $4227.7, U.A.E with $4158.9, Hong Kong with $1244.6 and Japan with $604.6. To promote foreign investment in future12 the BOI ‘Foreign Investment Policy 2013-2017’ introduces “Operational Window” for attracting FDI into Pakistan, which includes; Policy Formulation, Public-Private Sector Dialogue, Investment Facilitation, Coordination Network with Stakeholders Ministries and FDI Promotion Campaign (BOI, 2013). The key objectives of Investment policy and FDI strategy 2013- 2017 are; curtailing cost of doing business, to reduce the time constraints, cost of starting business and cutting down procedures and processes. The new policy stresses liberalisation of economy by providing protection to investment, more facilitation to investors, removal of regulatory hurdles, public- private partnership and better co-ordination among stakeholders. This policy will help to enhance Pakistan’s international competitiveness in attracting, stating and long term continuation of businesses, industrial and financial operations (DAWN NEWS, 2013). 34 12 Objective # 3, See chapter No. 2
  36. 36. 35 CHAPTER 7 CONCLUSION In the end it is concluded that Dictatorship attracts more Foreign Investment in Pakistan than Democracy. The reason for favouring Dictatorship is first stability, and in Pakistan it is experienced that policies are more stable under Dictatorship rather than Democracy, because decision making power is in one hand. The other reason for favouring dictatorship is that whenever military government rule Pakistan, Pakistan involves itself with America against on-going War, which results in high foreign investment inflows. From 1997 to 2014 Communication (IT & Telecom) sector, remained one of the leading contributor of FDI in Pakistan, has received $6545 million (23.9%) foreign investment. The telecom was one of the most attractive sectors for foreign investors from 2005 to 2008, but in 2011-2012 it has witnessed an outflow of $253 million. The reason behind outflow was: high operational costa and tough competition environment, suspension of licences by PTA on different grounds, and dispute between GOP and Etisalat over legal transfer of land and property titles. After communication sector the second most attractive sector for FDI in Pakistan is Oil and Gas sector, and has received $6160 million (22.5%) foreign investment. Third Financial Business that has received $5564 million (20.4%) foreign investment. The introduction of “Operational Window” in Foreign Investment Policy 2013-2017 will help to enhance Pakistan’s international competitiveness in attracting, stating and long term continuation of businesses, industrial and financial operations.
  37. 37. 36 CHAPTER 8 RECOMMENDATION Pakistan is among the emerging economies of the world so the government should strive hard to make the investment environment attractive for both local and foreign investors. Foreign investment has been hit badly by power shortage and at the same time Pakistan also faces terrorism and security problems. As instability in country and energy crises are the factors discouraging foreign investment in Pakistan, so these problems should be addressed on priority basis to give green signal to foreign investors. Current government should introduce more investment-friendly, stable and long term investment policies to encourage foreign investment in the country. These policies should not be interfered or amended again and again every few months and should not be abruptly changed with the change in government. As the macroeconomic policies that attract foreign private investment take at least three years to show their impacts so stability in policies is needed.
  38. 38. 37 CHAPTER 9 BIBLIOGRAPHY (Akhtar. (2000). The determinants of foreign direct investment in pkaistan. Lahore journal of econometric. anwar, M. a. (2006). the political ecomony of US aid to pakistan. journal of ddevelopment studies . Aqeel and nishat. (2004). The determinants of FDI in Pakistan. The Paksitan develpoment review, 651-664. Ashfaque, K. H. (1997). Foreign direct investment in pakistan. Awan.Khan & us-Zaman, 2011; Brooks & Sumulong, 2003. (n.d.). Ball, McCulloch (2002) ; Hills (2003. (n.d.). international Business: The Challenge of Global Competition. Boston: McGraw-Hill. Benhua, Y. (2007). autocracy, democracy and FDI inflows to developing countries. International Economic Journal, 419-439. Blomstrom. (n.d.). BOI. (2013). Foreign Direct Investment strategy 2013-2017. Board of Investment-Pakistan. Bosworth and Collins. (1999). Brecorder. (2012). Retrieved from http://www.brecorder.com/top-stories/0:/1265045:promoting-investment- and-trade-zardari-pins-his-hopes-on-provinces/?date=2012-12-07 Caves, 1974; Blomstom, 1989; Blomstrom and Kokko, 1998). (n.d.). Chandran, D. S. (2012). Declining foreign direct investment. IPCS. Cheema, F. (2004). Macroeconomic Stability of Pakistan. ACDIS Occasional Paper, 10-11. Cowhey 1993; Fearon 1994;. (n.d.). Dawn News . (2004). Major hurdels affecting FDI identified. DAWN NEWS. (2001). Retrieved from http://www.dawn.com/news/11965/fdi-records-58pc-rise-in-july- nov DAWN NEWS. (2003, 02 19). Retrieved from http://www.dawn.com/news/82736/fdi-in-july-jan-up-by- 164pc DAWN NEWS. (2004, 08). Retrieved from http://www.dawn.com/news/366918/snags-in-the-inflow-of- fdi
  39. 39. DAWN NEWS. (2004). Retrieved from http://www.dawn.com/news/365200/fdi-stands-at-949-4m-in- 38 2003-04 DAWN NEWS. (2005, 07). Retrieved from http://www.dawn.com/news/148363/pakistan-received-record- fdi-in-2004-05 DAWN NEWS. (2009). Retrieved from http://www.dawn.com/news/829582/fdi-increases-despite-global- crisis DAWN NEWS. (2009). Retrieved from FDI dips, portfolio investment increases: http://www.dawn.com/news/983375/fdi-dips-portfolio-investment-increases DAWN NEWS. (2010). Retrieved from http://www.dawn.com/news/592409/fdi-fpi-on-slippery-slope DAWN NEWS. (2011). Retrieved from http://www.dawn.com/news/598872/fdi-falls-14pc-in-july-dec DAWN NEWS. (2012). Retrieved from http://www.dawn.com/news/732282/pakistan-among-major-recipients- of-fdi-in-south-asia DAWN NEWS. (2012). Retrieved from http://www.dawn.com/news/757332/fdi-plunges-by-67pc DAWN NEWS. (2012). Retrieved from http://www.dawn.com/news/757383/pakistan-foreign-investment- plummets-67-per-cent DAWN NEWS. (2012). Retrieved from http://www.dawn.com/news/757332/fdi-plunges-by-67pc DAWN NEWS. (2013). Retrieved from http://www.dawn.com/news/796269/pakistan-net-fdi-declines- 9-7-per-cent DAWN NEWS. (2013, 09). Retrieved from http://www.dawn.com/news/1043989/pakistan-foreign-investment- up-100-per-cent-in-july-aug DAWN NEWS. (2013, 09). Retrieved from http://www.dawn.com/news/1043989/pakistan-foreign-investment- up-100-per-cent-in-july-aug DAWN NEWS. (2013, 10). Retrieved from http://www.dawn.com/news/1051139/fdi-rises-by-85pc DAWN NEWS. (2013). FDI surges by 30% to $853m in 10 months of FY13. DAWN, N. (2002). Attracting FDI is not a too difficult task. Donnell, O. (1978). Eeconomist Intelligence Unit. (1998). Pakistan country report. ePakistan. (2014). Retrieved from http://enews.epakistan.com/govt-striving-for-reforms-to-attract-investors- nawaz-sharif/ Fazl-e-Haider. (2008). Paksitan markets look to post-poll gains. ASIA TIMES. Froot,K.A and J.C.Stein . (1991). Exchange rate and foreign direct investment . journal f economics.
  40. 40. 39 Fry. (1993). foreign direct invetsment in southeast asia. Gastanaga, Nugent and Pashamova. (1998). Host country reforma and FDI inflows. Ghazali, A. (2010). analyzing the relationship between FDI, Domestic investment and Economic Growth for Pakistan. International research Journal of Finance and Economic. Globerman and Shapiro. (2003). Governance infrastructure and U.S FDI. Journal of International Business Studies, 19-39. Goldenstein and Razin. (2006). An information based trade-off between FDI and FPI. journal of international economics. Honley. (2004). Chasing the dragon: accounting for the under-performance of India by comparison with China in attracting Foreign Direct Investment. Joutnal of international developement, 1039-1052. Huang. (2003). Huge fraud schemes behind "black curtains" favor the "agricultural sector". Hussain. (2003). insider.pk. (n.d.). Retrieved from http://insider.pk/national/list-of-prime-ministers-of-pakistan-since- 1947-with-photos/ (2012). Investmenst Climate Statement- Pakistan. Bureau of Economic and Business Affairs. Investment climate in pakistan. (2012). Retrieved from http://www.state.gov/e/eb/rls/othr/ics/2012/191214.htm Iqbal, S. (2006). DAWN NEWS. Retrieved from http://www.dawn.com/news/184653/fdi-rises-190pc-in- 8-months Israr Ahmad . (2013). FDI down 27% under PML-N govt: RCCI Chief. Rawalpindi: The Nations. Itay and Razin. (2005). FDI vs. FPI. Jones and R.Golov. (2000). Obstacles to FDI in Russia . European Business Review, 187-197. Khaleeq. (2005, 08). DAWN NEWS. Retrieved from http://www.dawn.com/news/153469/fdi-up-by- 129pc-in-july Khan. (1996). Khan and Nawaz. (2010). Economic determinants of FDI in pakistan. Journal of Economics. Kobrin,2005; Le and Ataullah 2006. (n.d.). La porta and Vishny. (1998). law and finance. Journal of Political Economy, 1113-1155. le and Ataullah. (2006). Foreign Capital and Economic Performance of Pakistan. The lahore journal of economics.
  41. 41. Le and Ataullah. (2006). Foreign Capital and Economic Performance of Pakistan. The Lahore Journal 40 of Economy, 1-32. Le, M. h. (2002). foreign capital and economic performance in pakistan. The lahore journal of ecomonic. Li & Resnick ; jensen. (2003). M.susan, C. (1999). Capital flows to developing ecomonies. Mohiuddin Aazim. (2002, 04 23). DAWN NEWS. Retrieved from http://www.dawn.com/news/29696/higher-us-investment-raises-fdi-to-287-4m-july-march- 2001-02 Masood, M. a. (n.d.). Retrieved from http://masoodandmasood.com/what-are-the-benefits-to-foreign- investors-for-investment-in-pakistan-company-registration/ Mello, D. (1997). foreign direct investment in developing countries and growth. Journal of development studies. Mohammad Arifeen. (2013). The Financial Saily. Retrieved from http://www.thefinancialdaily.com/RSS/RSSNews.aspx?newsid=154304 musharraff, P. (n.d.). Pervez musharraff, in the line of fire. London. musharrafsupporters.wordpress.com. (n.d.). Retrieved from http://musharrafsupporters.wordpress.com/2007/12/18/corporations-boom/ Nadia Mushtaq . (2013). Impact of Terrorism on Paksitan. Nath. (2005). Nathan M. Jensen. (2003). Democractic governance and multinational corporations: political regimes and inflow of foreign direct investmenst. Cambridge University Press. News, D. (2001, 09 14). North & Weingast . (1989). Constitutions and Commitment: the evaluation of institutions governing public choice in 17th century England. 803-832: Journal of Economic History. O'Donnell (1978) Haggard (1990) & Greider (1998. (n.d.). OECD International Investment. (n.d.). Retrieved from http://www.oecd-ilibrary.org/sites/factbook- 2013-en/04/02/01/index.html?itemId=/content/chapter/factbook-2013-34-en Olson,1993. (n.d.). Ozawa and Castello. (n.d.). pmln.org. (2013). Poor governance,political risk main resons for fall in FDI inflows. pmln.org. Poon. (2000). Foreign direct inveetsment and economic growth in east asia.
  42. 42. 41 Presidentmusharraf.wordpress.com. (n.d.). Retrieved from http://presidentmusharraf.wordpress.com/2009/03/05/achievements-of-pervez-musharraf-his- government/ Quazi and Mahmud. (2004). Rehana Saeed Hashmi. (n.d.). War on terrorism- Impact on Pakitan's Economy. Rab Nawaz, M.Ayub and Umie Habiba. (2013). Empirical investigation of factors affecting FDI in Pakistan. Applied Science Journal. Razin. (2002). Capital inflows and domestic investment. New econometric look. Razin and Sadka. (2002). Gians from FDI inflows with incomplete information. Sanchez-Robles 2002 and Adams 2009. (n.d.). Sarno and Taylor1999, world bank 1999, sula and willett. (n.d.). SBP. (2009). The state bank of pakistan economy "annual report 2008-2009. Schneidr and B. Frey. (1985). Economic and political determinants of foreign direct investment. Shahid Iqbal. (2008). Retrieved from http://www.dawn.com/news/303169/fdi-rising-despite-negative- indicators Shahid Iqbal. (2009). DAWN NEWS. Retrieved from Portfolio investment surges, FDI plunges: http://www.dawn.com/news/484836/portfolio-investment-surges-fdi-plunges Shahid Iqbal. (2013). DAWN NEWS. Retrieved from http://www.dawn.com/news/797942/outflow-of- fdi-hits-economy Shahid Iqbal. (2013, 09). DAWN NEWS. Retrieved from http://www.dawn.com/news/1043393/fdi-up- 101pc-in-july-aug Shahid Iqbal. (2013, 12). DAWN NEWS. Retrieved from http://www.dawn.com/news/1074728/low-fdi- adding-to-woes Shahid Iqbal. (2014). DAWN NEWS. Retrieved from http://epaper.dawn.com/DetailNews.php?StoryText=16_04_2014_010_005 Shaid Iqbal. (2007). Protfolio investmenst stages comeback. DAWN NEWS. Shaid Iqbal. (2013, 05). Retrieved from http://www.dawn.com/news/1011662/fdi-slightly-improves Shaid Iqbal. (2013). DAWN NEWS. Retrieved from http://www.dawn.com/news/1029350/foreign-investment- doubles Shaid Iqbal. (2014). Higher Foreign Investment remains a dream. Karachi: DAWN NEWS. Syed, B. S. (2006). Retrieved from http://www.dawn.com/news/215063/pakistan-fdi-inflow-grew- 95pc-in-2005
  43. 43. 42 Taha Khan . (2014). DAWN NEWS. Retrieved from http://epaper.dawn.com/DetailNews.php?StoryText=14_04_2014_602_003 The Economist Intelligence Unit. (1997). Pakistan Country Report. UNCTAD. (2002). UNCTAD. (2011). Vernon. (n.d.). (2011). world develpoment report . YI, F. (2001). political freedom, political instability and political uncetainty. Zaidi. (2004). Snags in the inflow of FDI. Retrieved from www.down.com/2004/08/09/ebr,htm Zallp. (n.d.). Retrieved from http://zallp.com/invpol.html Zhao and Du. (2007). Causality between FDI and economy growth in China. The chinese economy, 68- 82. Zulqernain Tariq. (2010). Retrieved from http://www.dawn.com/news/326634/fdi-in-telecom-sector- drops 2013). Retrieved from infoplease: http://www.infoplease.com/world/statistics/most-populous-countries. html
  44. 44. 43 CHAPTER 10 ATTACHMENT 1 (TELEPHONIC INTERVIEW QUESTIONS) FDI/FPI PATTERNS IN PAKISTAN Date Interviewer Time Interviewee Recording ref: Assalam-o-Alaikum, I am going to ask some brief questions about current situation of FDI in Pakistan. Your corporation in this regard will help me to better understand this scenario. 1. What is your opinion about FDI in Pakistan? 2. What do you think type of government (Democracy / Dictatorship) really affects FDI/FPI inflows? HOW? 3. Which factors do you think drive FDI in Pakistan? 4. Which factors in your opinion drive FPI in Pakistan? 5. What are the reasons behind low FPI (as compared to FDI) in Pakistan OR reasons behind outflow of FPI in Pakistan?
  45. 45. 44 ATTACHMENT 2 (TELEPHONIC INTERVIEW ANSWERS) 1. Mr. Ata Malik FDI is needed in Pakistan because we need capital resources to grow. In long term democracy works better for FDI because highest FDI in Pakistan was in 1995 and after 2006-2007 crises the highest FDI was in 2011. One thing that is needed for FDI is an independent legal system. FDI inflows are more in democratic countries because if stability remains the same democracy is better than dictatorship. Moreover democratic governments are regarded as trustworthy. The factors that drive FDI in Pakistan are Policy stability because investors want stability and economic reforms (opening up of economy for foreign investment). The reasons behind low FPI in Pakistan as compared to FDI are; our capital markets are not big enough, FPI compared to FDI is more effective by terrorism and macroeconomic instability. 2. Prof. Ehsaan Ullah As Pakistan is a developing country so FDI is needed for economic growth especially third world countries purely depends on FDI. The investors’ confidence is developed on stability (in policy making). And in Pakistan it is experienced that policies are stable under dictatorship. Because decision maker is only one and parliament is no involved so you don’t need any bill to be approved. On the other hand under democracy you need approvals at multiple levels that cause delay of process that why stability is found under dictatorship. Investment opportunity is the main factor that drives FDI in Pakistan. Capital market stability and interest rate that depends on inflation rates. If inflation rate of a country is high that means interest rates are high which automatically increase FPI. 3. Dr. Qais Aslam All nations need finances developed and developing. There are three types of finance one which government takes as public debt, second which private sectors takes from their partners to sell them something and third, foreign investors invest their money to gain foot hold in local economy. The principle is very simple and the principle is cost and benefits analysis. If the overall cost of a foreign investment is more than the overall benefits then it should not be encouraged and if overall benefits are more than the overall costs then an economy should welcome them. So any foreign investment that enhances our skills, our quality of product, and competition in local market and brings us closer to
  46. 46. the world economy should be encouraged. And if any foreign investment that becomes a monopoly on our natural resources and assets should be discouraged. When Ayub khan became the dictator of Pakistan, U.S.A started Korean War and the dictators Pakistan supported U.S.A against Korean War we got colossal amount of money and growth rate went up. When Bhutto came into power Pakistan was not part of any war and we didn’t get any money and growth rate went down. When Zia-ul-haq came to power America was involved in first Vietnam War and then the afghan War against the Soviet Union and we were partners to America and we got colossal amount of money and our growth rate went up. And when Zia-ul-haq went away and our so called democratic government of Benazir and Nawaz Sharif came in to power we were not part of war against Soviet Union so America stop giving us money. When Musharraf came to power America was in War against Taliban and we supported the American efforts in destroying the Taliban’s and colossal amount of investment came in our country and growth rate again went up and after Musharraf the money stopped flowing and growth rate came down. So there is a co-relationship between dictatorship and American interventions in the world and therefore foreign investment. Democracy which wants peace in the world and does not favour those military targets ultimately reduces foreign investment. The profits motives and security of investment drive FDI in Pakistan. You will find more Pakistanis are investing abroad then what foreigners are investing in Pakistan because profit motives in Pakistan are less and the cost of doing business is more. Money lands in China, India an even in Afghanistan but not in Pakistan because we can’t insure neither the profitability nor the security. Big profits drive portfolio investment in Pakistan. In portfolio investment an investor just need to put their money and they have to face no hassles of talking to all those inefficient government and non- government active which a direct investors have to face. And therefore the opportunity cost of portfolio investment is far blessed then the opportunity cost of foreign direct investment. Those who are risk takers go for portfolio investment rather than direct investment. When all the input costs are going up (cost of land, energy, labour, technology, loans), form where the investors will earn profits because foreign investors come to capture local market to ensure profits margins. 45
  47. 47. 46 4. Prof. Yasir Iqbal The structure of FDI in Pakistan is different from all over the world. We have seen that during Musharraf era the FDI in Pakistan was high. When a foreign company came in a country they see how much they can earn and take back to their home country. Under democracy there is no fear of restrictions but under dictator there is fear of sudden restriction. The macroeconomic policies that attract FDI take at least three years to show their impacts. The discouraging fact in 1990’s was that when new government came to power they repudiate the previous government contracts. The strategic vision of Musharraf attracts foreign companies in Pakistan. Pakistan receives record FDI under Musharraf period. The main problem in Pakistan’s democracy is lack policy coherence, terrorism, political instability and the scenario of democracy and dictatorship in Pakistan is different from rest of the world. One other factor is interest rate, when interest rate is high foreign companies are reluctant to land in Pakistan because opportunity cost of doing business is high but when interest rates are low foreign companies freely move in Pakistan. When more currency is issued by State Bank that results in high demand, high demand means high prices, high prices means high inflation that leads to high interest rates which ultimately discourages FDI. Musharraf attract foreign investors through low interest rates. The factors that attract FPI are capital gain and dividend.
  48. 48. SECTOR 1996-1997 1997-1998 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 Oil and Gas 99.1 112.8 79.7 80.7 268.2 186.8 202.4 193.8 312.7 545.1 634.8 775.0 740.6 512.2 629.0 440.4 346.9 Financial Business 20.4 24.4 29.6 -34.9 3.6 207.4 242.1 269.4 329.2 930.3 1864.9 707.4 163.0 310.1 64.4 314.2 118.7 Textiles 27.3 1.7 4.4 4.6 18.5 26.1 35.4 39.3 47.0 59.4 30.1 36.9 27.8 25.3 29.8 10.0 -0.3 Trade 12.6 5.5 7.6 13.2 34.2 39.1 35.6 52.1 118.0 172.1 175.9 166.6 117.0 53.0 25.3 5.7 -15.2 Construction 21.5 13.9 21.2 12.5 12.8 17.6 32.0 42.7 89.5 157.1 89.0 93.4 101.6 61.1 72.1 46.0 16.0 Power 239.5 131.4 67.4 39.9 36.4 32.8 -14.2 73.4 320.6 193.4 70.3 130.6 -120.6 155.8 -84.9 28.4 28.7 Chemical 72.1 54.1 119.9 20.3 10.6 86.1 15.3 51.0 62.9 46.1 79.3 74.3 112.1 30.5 96.3 71.6 76.0 Transport 7.5 33.3 31 45.2 21.4 87.4 8.8 10.6 18.4 30.2 74.2 93.2 132.0 104.6 18.7 44.1 -5.8 Communication (IT & Telecom) - - - - 12.8 24.3 221.9 517.6 1937.7 1898.7 1626.8 879.1 291.0 -34.1 -312.6 -385.7 -132.5 Other 101.3 95.2 109.1 140.9 66.2 90.4 170.1 274.0 285.0 1107.2 764.5 763.4 586.3 416.3 282.6 872.6 85.3 Total including Pvt. Proceeds 601.3 472.3 469.9 322.4 484.7 798.0 949.4 1523.9 3521.0 5139.6 5409.8 3719.9 2150.8 1634.8 820.7 1447.3 669.8 Privatisation Proceeds 0.0 0.0 0.0 0.0 127.4 176.0 198.8 363.0 1540.3 266.4 133.2 0.0 0.0 0.0 0.0 0.0 0.0 FDI Excluding Pvt. Proceeds 682.1 601.3 472.3 469.9 322.4 357.3 622.0 750.6 1160.9 1980.7 4873.2 5276.6 3719.9 2150.8 1634.8 820.7 1447.3 669.8 47 ATTACHMENT 3 SECTOR WISE BREAK-UP OF FDI IN PAKISTAN (1997-2014) SOURCE: State Bank of Pakistan & Board of Investment * The data of 2014 is form July 2013 to March 2014 2013-2014 (July-Mar)
  49. 49. 48 ATTACHMENT 4 FPI INFLOWS IN PAKISTAN DURING 1997-2014 YEARS FPI 1996-1997 267.4 1997-1998 221.3 1998-1999 27.3 1999-2000 73.5 2000-2001 -140.4 2001-2002 -10.1 2002-2003 22.1 2003-2004 -27.7 2004-2005 152.6 2005-2006 351.5 2006-2007 1820.4 2007-2008 19.3 2008-2009 -510.3 2009-2010 587.9 2010-2011 364.6 2011-2012 -60 2012-2013 199.5 2013-2014 (July-Mar) 118.3 Source: State Bank of Pakistan & Board of Investment * The data of 2014 is form July 2013 to March 2014
  50. 50. 49 ATTACHMENT 5 FDI INFLOWS IN PAKISTAN DURING 1959-2014 (UNDER DICTATORSHIP AND DEMOCRACY) FDI INFLOWS US$ MILLION YEAR YEAR 1959 3.9 1960 5.9 1961 2.3 1962 1 1963 2.5 1964 37.1 1965 3.9 1966 49.5 1967 37.1 1968 1.4 1969 59 1970 72.1 1971 90.1 1972 8.1 1973 0.5 1974 6.3 1975 14.9 1976 22.5 1977 10.7 1978 35.5 1979 36 1980 28.2 1981 35 1982 98 1983 42.1 1984 48 1985 70.3 1986 145.2 1987 108 1988 162.2 FDI INFLOWS US$ MILLION 1989 209 1990 216.2 1991 246 1992 335.1 1993 306.4 1994 354.1 1995 442.4 1996 1101.7 1997 682.1 1998 601.3 1999 472.3 2000 469.9 2001 322.4 2002 484.7 2003 798.0 2004 949.4 2005 1524.0 2006 3521.0 2007 5139.6 2008 5276.6 2009 3719.9 2010 2150.8 2011 1634.8 2012 820.7 2013 1447.3 2014 669.8 Source: Handbook of Statistics on Pakistan Economy & State Bank of Pakistan * The data of 2014 is form July 2013 to March 2014
  • SakhiAhmad2

    Dec. 20, 2020
  • AliSindhu1

    Aug. 15, 2020
  • ViratAgarwal3

    Jan. 31, 2018
  • KrunalRajyaguru

    Mar. 24, 2017
  • oogle4

    Apr. 22, 2016
  • hus2020

    Dec. 28, 2015
  • MurshadSf

    Aug. 6, 2015
  • shery73

    Aug. 4, 2015
  • malikshafaqat

    Jul. 27, 2015
  • javediqbal1234

    Dec. 5, 2014
  • SamRizvi0345

    Oct. 2, 2014

This is an investigative study to find out relationship between type of Govt. (Dictatorship & Democracy) and FDI/ FPI patterns in Pakistan.

Vistos

Vistos totais

4.543

No Slideshare

0

De incorporações

0

Número de incorporações

14

Ações

Baixados

0

Compartilhados

0

Comentários

0

Curtir

11

×