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Pakistan sets $3.3b FDI target

"The Etisalat has already paid us $260 million on account of acquiring 10 per cent shares of Pakistan Telecommunication Company Limited (PTCL) and they would be depositing the remaining $2.25 billion shortly and this is how we plan to have a total of $3.3 billion FDI during the current financial year", said Chairman Board of Investment (BoI) Wasim Haqqie.

Talking to this correspondent, he said FDI in Pakistan in the first month (July) of the current year has amounted to $119.6 million, up by 129 per cent over $52.2 million of the same period last year.

He said the communication sector attracted the major chunk of about $27.6 million or over 23 per cent FDI during the first month of the current fiscal year.

This was followed by $23.3 million or 19.5 per cent FDI attracted by oil and gas and petroleum refining, $17.3 million (14.5 per cent) by trade sector, $9.6 million (8 per cent) by financial business, $7.3 million (6.1 per cent) by chemical sector and $4.4 million by construction sector. The remaining $30.1 million FDI was attracted by other sectors.

The United States of America emerged as largest contributor to FDI in Pakistan with $31.2 million, followed by UAE with $23.4 million, $12.7 million from Netherlands, $11.3 million from UK, $8.7 million from Switzerland and $4.3 million from Japan.

Mr Haqqie said Pakistan attracted a total of $1.524 million FDI during 2004-05, which was 61 per cent higher than corresponding period of 2003-04. This also included $363 million FDI as privatisation proceeds of 10 per cent first tranche of PTCL and $103 million second tranche of Habib Bank Limited's privatisation.

The BOI chief said there had also been $152.6 million portfolio investment during the last financial year and as such the figure of total investment in the last year stood at $1.677 billion.

Asked as to why the government had fixed a conservative target of $3.3 billion FDI for the current year although a $2.6 billion would be coming as privatisation proceeds of Pakistan Telecommunication Company Limited (PTCL) alone, he said Etisalat of UAE had already paid an amount of $260 million as first installment of PTCL's bid money.

Besides, many investors who have won major privatisation transactions were paying bulk of their bid money by raising financing from the local banking sector. As such, since they are not bringing equity in the form of foreign exchange, the local fund raising is not included in the FDI.

A source at the BOI further explained that Mr Ghaith Pharoon of Attock Group - the successful bidder of National Refinery Limited - had deposited about $230 million of equivalent local currency from its local business and financing arrangements from the local banks. Similarly, Warid Telecom also made an investment of about $200 million in Pakistan by raising financing from its local banks i.e. Bank Al-Falah and United Bank Limited.

In 2003-04, FDI in Pakistan stood at $949.4 million, which was 19 per cent higher than corresponding period of 2002-03. This also included $198 million first tranche of the HBL sale proceeds.

Similarly, FDI stood at $798 million during 2002-03, which was 65 per cent higher than $484.7 million of the corresponding period of 2001-02.

This also included $176 million privatisation proceeds of United Bank Limited.