The numbers are in and it is not a forecast anymore, foreign investment has declined this year. Our biggest investor is the United States, and this should be a reality check for those who think that the time of the US is over and China is king. The US is followed by China and UAE. Net Foreign Direct Investment (FDI) was at negative $7 million this May, as opposed to the net flows of $612.2 million in the same month of the preceding fiscal year. The huge difference in FDI is mainly due to the auction of the telecom spectrum, as the one-time sale of 3G/4G licences had fetched the government $610.9 million in May 2014. Thus, it is not that we were doing better before, as the highs were one-time sales, by the negative figures should be some cause for concern as this means companies and money is boing pulled out. The largest net outflow of FDI in the last year was in the cement category ($54.8 million) followed by metal products ($50.2 million) and pharmaceutical and over-the-counter products ($47.4 million).

The government, for the last two years, has been expressing hopes of huge foreign investment in the country, particularly from China. The recent promises of Chinese investment should have given an international signal that Pakistan is ripe for business. However, the data indicates that so far it has failed to mobilise foreign investors. The recent announcement of the budget had a very optimistic tone, and increases in foreign investment were lauded; yet not supported by fact. We cannot just lean on Chinese development plans, and assume they are the fact track to development, when figures show the opposite picture.

At least four multinational pharmaceutical companies have left Pakistan in the last six years. The exit of investors is manageable so long as jobs remain intact. Multinational pharmaceutical company, Johnson and Johnson, recently wound up its operations from Pakistan and sold the company to a Pakistani pharmaceutical company for reportedly $30 million. Negative FDI figures are one signal that the economy is contracting, and domestic production and must be encouraged to offset any more pull-outs. With IMF’s constant interference, that requires increases in taxes and decreases on government spending, the government does not know how to spend or create jobs. The onus is thus on the private sectors, to make money and miracles, before negative figures are seen against other investment categories.