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AN OVERVIEW OF FOREIGN DIRECT INVESTMENTPresented by;

Sadia Khalid-(BC09-069)Sana Javaid-(BC09-070)

Saira Khan-(BC09-067)Hina Masood-(BC09-066)

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An Introduction Investment:

It is a process of investing money or profit for profit or

interest. In a country investment is really important toincrease productivity of that nation.

Types of Investment:

1.Local investment

2.Foreign investment

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FOREIGN INVESTMENT

Foreign DirectInvestment(FDI) Foreign PortfolioInvestment(FPI) Official Flows

CommercialLoans

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Kinds Of Foreign AssistanceForeign assistance taken by Pakistan mainly consists of; Foreign aid

Accompanied by strict conditionality's by the donor

country Foreign debts

Burden of indebtness is heavy in itself. Self-reliance policyignored

Foreign investmentsTwo prominent types in Pakistan being prevailed;

foreign portfolio investment &foreign direct investment.

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Foreign Portfolio investment

Foreign Portfolio investment quite in a bloom until 2007.

SBP data reveals that during July to August 20,2008;

the USA investors withdrew $217mn,

UK$64mn,

Switzerland $38mn, Hong Kong $27mn

Singapore $11mn.

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Foreign Direct Investment FDI is a kind of foreign investment in which the

investors come with long-term interests, and not onlyinvest capital but also introduce new technology in the

host country. Private companies incorporated in one country.

Private Co. also called MNCs.

Invest in the host country via franchises,branches,etc.

No government control over these MNCs.

Net assets and net income of these MNCs more thantotal budget of Pakistan.

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Graphical Analysis Of FDIMost of Pakistansinvestment comes from itsWar on Terror in 2008.

During the year 2008, UShad the largest share of38.46% of FDI Inflowfollowed by UAE (17.23%),UK (13.52%), Hong Kong(9.98%) and Norway

(8.08%).

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Some Salient Features Of FDI FDI enable the host countries to achieve investments

level beyond their capacity to save.

Potent weapon to achieve countrys socio-economicgoals like poverty reduction.

Contribute in capital formation and foreign trade.

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Country-wise FDI inflow Pie ChartWe can see the major inflows are from thedeveloped world, namely, USA 39%, UK14%, and Hong Kong 10%. The othercountries being Japan, U.A.E, Norway,

Germany, Switzerland and Saudi Arabia.

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Sector-wise FDI InflowThe communication (IT & Telecom)sector bring highest foreign investment of1, 625.3 million with 37% share in year2007-08.

Financial business 1,607.6 million (36%).

Oil & gas 634.8 million (14%).

Power 70.3 million (6%).

Trade with 175.5 million having 4% sharein total FDI.

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BenefitsOf FDI Reliable and reputable tool for developing countries. Transfer of technology.

Management skills and human capital development. Tax revenues.

Mutually beneficial.

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BENEFITS Opportunity for SMEs.

Addition of value added products.

Reduction of saving-investment gap. CSR(corporate social responsibility).

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Disadvantages of FDI Regional disparity.

No government influence and supervision.

Issue of self reliability. Issue of national security and autonomy.

Implementation of undesirable policies.

Stiff competition for local investors.

Geographical or political instability of host country.

Import orientation.

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Steps To Be Taken Enrollment of local partners in MNCs.

Transfer of technology should be stressed upon.

MNCs to be encouraged to add value to the localgoods.

Local enterprises to take benefit from profitability ofproject.

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Conclusion The net advantage or disadvantage of FDI depends

upon the regulation & control of MNCs operating thehost country by the host country's government. If the

government takes appropriate steps to avoid errorslike;

Over-dependence on foreign investors.

Dumping of products at high prices. Undesirable outflow of foreign remittances.

Inappropriate management of labor.

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Final Note So despite of some shortcomings ,we can get

maximum profit out of the foreign investment, on thecondition that they are invested at the right place andat the right time.