Foreign Direct Investment Falls Sharply for Pakistan in July August 2009

Foreign Direct Investment (FDI) is a very important thing for any third world country. In the last one decade, Pakistan government has been trying very hard indeed to attract foreign investment and got some success. Well, in July-August 2009, FDI decreased 57% compared to the same two months of last year.

Bloomberg reported:

Investment in July-August period fell to $351.4 million from $824.7 million a year ago, according to data on the Web site of the Karachi-based State Bank of Pakistan. Overseas investors bought a net $60.8 million of Pakistani stocks in the two months, compared with sales of $178.3 million a year earlier, according to the data.

This is surely bad news for Pakistani economy. Well, I think that two factors are to be mainly blamed. First of all, global economic recession has resulted in less flow of investment from rich western countries. Secondly, the security condition of the country often brings it to the headlines of international media. So, naturally foreign directors are worried about it. 

Less Foreign Investment and More Worry for Indian Job Seekers

I found an interesting and detailed report in New York Times about the Indian economy. In 2006, 2007 and 2008, I remember blogging a lot about the growing Indian economy, increasing foreign direct investment and more opportunities for the educated people in the country. However, due to the global economic recession, the economy is suffering and foreign investment has been decreasing from the last part of 2008 and this damaging trend is counting even in 2009. First, I would like you to read the report of New York Times by following the link: India, Suddenly Starved for Investment

The last few years were like a fairy tale for many educated people in India: just get a degree in Business or IT subject from a university and the jobs will run after you. This was the common scenario for many people in the country as many leading companies in the world were in an expansion mood both in terms of outsourcing their jobs or increasing their presence in the local market.

The stock exchange also witnessed healthy growth and a lot of foreign funds were in the stock exchange. That too has changed in the last 6 months. Don’t think that only the educated middle class people are suffering. Poor workers are suffering too because diminishing foreign investment has caused cancellation of many on going or soon to be started projects in the real estate sector.

(This entry was originally uploaded on May 2009.)

44% Foreign Direct Investment in Nepal Coming from India

Foreign Direct Investment (FDI) is perhaps an important indicator about the economy of a country. Nepal is a poor country and it is always in need of more FDI in order to develop the condition of the people. In fact, one of the direct impacts of FDI in the local economy is the generation of employment. Unemployment is a big problem for the country. Poverty is the biggest challenge. Today, I found two reports that India constitutes 44 pc of total FDI in Nepal. Well, I am not sure whether this statistics is accurate or not but it seems that the country is heavily dependent on India about FDI.

There is nothing wrong in coming 44% FDI from a neighboring country but if Nepal and India relationship suffer any difficulty then it can be bad for Nepalese economy.

(This entry was originally published in April 2009 and it based on the context on that time.)

Foreign Direct Investment (FDI) in Nepal: Some Observations

I just finished reading an excellent article written by Kundan Pokhrel Majagaiya (Donghua University, Shanghai, China) published in the website of Telegraph Nepal. If you are interested about the country then I would recommend you to read it: Foreign Direct Investment in Nepal. Kundan Pokhrel Majagaiya has given us a overall picture of the foreign direct investment (FDI). When it comes to the matter of FDI, Nepal seems to get out shadowed completely by its two large neighbors India and China. Even, it does not attract the same level of attention like other regional neighbors in South Asia Bangladesh and Pakistan.

Well, first of all, Nepal has a major obstacle- it is a landlocked country and it does not have any sea port. This is perhaps a strong negative factor that discourages the potential foreign investors. At the same time, most people in the country are poor and Nepal does not have a big market for large companies. Export oriented FDIs seem to be most viable option. However, the country has a thriving tourist industry and a significant portion of FDIs come in this sector. Textile and Ready Made garments is also getting some foreign investment.

I am a bit surprised to see that no big foreign investment came in the telecom sector yet. In my own country Bangladesh, it is the telecom sector that has attracted huge foreign investment in the last one decade. I believe that Nepalese market has the same potential.

Nepalese government will have to focus on developing the infrastructures and also ensure liberal trade policies for foreign companies. Bangladesh has set up Export Processing Zone in the capital Dhaka and it has brought some success in generating jobs and foreign exchange through export. Nepal can do the same thing and set up some Export Processing Zones where the investors will get all the facilities and support.

Nepal suffered from political instability and violence for many years and only in the last 3 years, there is some peace. So, it is the right time for the government to start a media campaign about the facilities that foreign investors can get.

(This entry was originally published in April 2009 and it based on the context on that time.)