Why it’s impossible to attract foreign investment

Pakistan desperately wants as much foreign investment as possible in the face of a balance-of – payments crisis. In view of a restricted area of volumetric growth in exports and remittances in the short term this need becomes much more urgent.

Pakistan’s Foreign Direct Investment ( FDI) rose to $2.56 billion in 2019-20, up from $1.36 billion in 2018-19 but under $2.78 billion in 2017-18. Investment in international portfolios (entirely in government debt securities due to the then prevalent lucrative high yields) had shot up to $2.45 billion in 2017-18 but then plummeted to minus $1 billion in 2018-19 and eventually stood at minus $241 million in 2019-20.

The PTI administration, now in its third year, is attempting to push FDI to greater heights and put international portfolio investment — both in government debt papers and stocks — back into positive territory, and the latest data reveals that its attempts have begun to produce modest results. By the way, in 2018-19 and 2019-20, international equity investment in equities have stayed weak in continuation of an earlier trend.

Economic conditions aren’t solid and fast-changing global trends that need so much of the nation if it wants to pursue sustained economic growth and development.

Combined with the Covid-19 induced recession in major economies and the country’s search to rebalance civil-military relationships for a durable democracy, these two factors make it difficult to accelerate foreign investment growth.