Ashleigh Lezard

FDI in Pakistan will be affected by the terrorist attacks on America and the resulting military strikes on Afghanistan but not as much as was first feared.

Investment had already declined by 74% for the financial year 2000/2001, as reported by the State Bank of Pakistan (SBP) in April. Now the Board of Investment in Pakistan (BOI) is expecting the investment climate will take three to six months to improve after “things return to normal”.

Gareth Pryce, south-east Asia specialist at the Economist Intelligence Unit (EIU) in London, said Pakistan’s investment climate was bad even before current events.

He added: “Investment decisions in Pakistan have always been affected by political stability and the economy could not really get much worse. He added that most foreign investment is on a small scale, mainly from the Middle East and China and is not expected to change or decline significantly. The EIU rates Pakistan as the fifth most risky country in the world to invest in.

One major area of foreign investment in Pakistan is the exploration and development of the oil and gas sectors. Since the US-led attacks on Afghanistan, foreign companies have pulled out technical staff as a precaution.

It has also been reported in the Pakistani press that several major foreign manufacturers, including IKEA, Gap and Nike, have cancelled orders from their Pakistani operations.

However, this was denied by the commercial attaché in the Pakistan consulate in London. “There have been no official reports of this, we have nothing to worry about,” he said. He added that the commerce minister for Pakistan had been in discussion in the past two weeks with the US over increasing investment in the textile sector in Pakistan.