Re: Over $ 3 b foreign investment in 2005-6 expected in Pakistan
**INTERVIEW: Pakistan FY05/06 FDI Likely Record $3.5 Billion-$4 Billion **
By Imran Maqbool, Of Dow Jones Newswires
KARACHI -(Dow Jones)- Pakistan is expected to see record direct foreign investments of $3.5 billion to $4.0 billion in the year beginning July 1, and $ 1.1 billion this year, a senior government official said. Waseem Haqqie, chairman of the state-run Board of Investment, told Dow Jones Newswires in an interview Monday that the projected FDI will include $2.6 billion from the sale of a 26% stake in Pakistan Telecommunication Co. “With inflow of proceeds from PTCL sale, FDI figure will be safely $3.5 billion next (fiscal) year. It could go up to $4 billion,” Haqqie said. Emirates Telecommunications Corp. (ETISALAT.AD), or Etisalat, placed the highest bid - nearly $2.6 billion - at an open bidding held on June 18 for a 26% stake in PTCL, the biggest privatization in the country’s history. Full proceeds from the sale are expected to be received within the next 60 days. Haqqie said FDI in the current fiscal year which ends June 30, 2005 could " easily cross" the $1.1 billion-mark. “It will be highest inflow of foreign investment in the history of the country,” Haqqie said. In the 1995-1996 fiscal year, the country received $1.1 billion worth of foreign investment.
According to latest available figures, Pakistan attracted $1.03 billion FDI in the first 11 months of the current fiscal year, up 14% from $902.8 million for the same period in the last fiscal year. For the previous full fiscal period, FDI was up 19% to $949 million. Separately, net foreign portfolio investment was $141.1 million in the period from July 2004 to May 2005, against net sales of $35.4 million in the previous period. The U.S. remained Pakistan’s top investor with a $254.8 million in investment, followed by the U.K.'s $164.1 million, while U.A.E.-based firms were third with an investment of $76.8 million. Haqqie said FDI in the current fiscal year included $241 million invested in the financial sector, $190 million in oil & gas, and $172 million in communications. “Structural reforms carried out by the government in practically every economic sphere during the last five years, is now paying dividends,” he said, adding that consistency in economic policies, conducive investment climate and a growing economy has helped to draw investors. Foreign investment in Pakistan started to rise after the administration of President Pervez Musharraf joined a U.S.-led war on terrorism post Sept. 11, 2001.
This new alliance resulted in aid inflows worth millions of dollars and also the lifting of economic sanctions. Haqqie said with a thaw in relations with arch rival India and a relatively stable situation in war-torn Afghanistan, perceptions about Pakistan’s security improved considerably. “Occasional (terrorists) incidents can happen anywhere. And we are no exception,” he said, adding that a bigger hurdle in drawing foreign investment is lack of infrastructure. “Improving infrastructure facilities is the biggest challenge for the government. A lack of these facilities does hurt foreign investment,” he added. The government is addressing this problem and has allocated a record PKR272 billion for public-sector development in the next fiscal year. “Things are improving, but a lot is needed to improve further,” he said, adding that with the country’s economy projected to grow by 7% to 8% a year over the next five years, the prospects of continuing FDI inflows are “bright.” Pakistan’s gross domestic product is estimated to have grown 8.4% this fiscal year - the highest rate in two decades - after a 6.6% expansion the year before.
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