Expectations Rise For Economic Rebound in Pakistan
Dollar-denominated debt sold by Pakistan returned 86.4 percent so far this year, more than any of the 45 emerging markets tracked by New York-based JPMorgan and 19 developed countries followed by Merrill Lynch & Co.
Aberdeen Asset Management Plc in London is bullish about Pakistan because the country is a beneficiary of international support. The U.S. House voted on June 11 to triple economic and development aid and to increase military assistance to stabilize a country vital to the war in neighboring Afghanistan.
While the US aid announcement attracts the attention of investors, the fact is that the Pakistani global diaspora's remittances to Pakistan are far larger than any foreign aid packages. Over 7 billion dollars have already been received in the first eleven months (July-May) of the current fiscal year 2008-09, according to APP.
Foreign direct investment in Pakistan declined by 8 percent to $3.04 billion, compared with $3.31 billion in the year-earlier period, according to Reuters.
In local currency, Pakistan's exports during July-April (2008-2009) were Rs.1,147,435 million (about $14 billion) versus Rs.938,428 million during the corresponding period of last year, showing an increase of 22.27 percent, according to Federal Bureau of Statistics. But the rupee decline against dollar has more than offset any increase in exports.
“We are positive,” said Edwin Gutierrez, who helps oversee $4.5 billion of global emerging-market debt at Aberdeen Asset Management Plc in London and added Pakistan dollar bonds to his funds earlier this year. “It was pretty clear that the international community is supporting Pakistan and providing it with a decent amount of money.”
An important source of investments in Pakistan are the Islamic nations of Asia and the Middle East. While the Islamic finance is still early in its early development stage, I see it as a crucial vehicle to ensuring in the future that significant part of the wealth of Muslim investors is invested with Muslim businesses in Muslim nations to help them develop. Already, the biggest foreign direct investors in Pakistan are Muslims from Dubai, Malaysia and the Middle East.
APP reported that Malaysia topped the list of investors making Foreign Direct Investment (FDI) in Pakistan during first six month of year 2008, according to data released by Ministry of Foreign Affairs. The Foreign Direct Investment during the first five months of current financial year reached US$ 1.8 billion registering an increase of 1.5 percent, export reached to US$ 8.2 billion with a growth of 20 percent and foreign remittance at 2.9 billion registered an impressive increase of 15pc.
The May Bank of Malaysia made the biggest investment of US$ 907 million in banking sector followed by Saudi Arabia with an investment of US$ 750 million in steel sector and UAE with an investment of US$ 500 million in power sector in Pakistan.
The global economic meltdown has not deterred the foreign investors, including Malaysians, from investing in Pakistan, as Pakistan’s economy showed extreme resilience and defied the economic recession with registering growth in FDIs, Export and Foreign Remittance.
The signs of an economic rebound in Pakistan are more visible today, bringing new investors and businesses to Pakistan.
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