http://www.thenews.com.pk/daily_detail.asp?id=251448

When I talk to my nieces and nephews, Pakistan’s millennial generation, I feel rejuvenated and perplexed, at the same time. I get excited because these young children are so creative and worldly. The minute I log into Skype, Gmail, or Facbook, my young buddies tell me about some technological experience or an epiphany they had on how to change Pakistan. I am invigorated listening to their ideas.

I am at a loss, however, when these bright young kids tell me how they struggle to find a job. I am baffled because they are looking for job the same way I did. Trust me it was a long time ago.

In 1985-86 when I was entering the job market with my peers, we had a routine. We would review all the vacancies announced in the daily ‘Dawn’ every week and mail our resume (we used to call it bio-data) to prospects. And, we waited. Like other struggling middle class families we did not know ‘people’ at the right places. But we applied for positions and prayed for an interview and all of us finally found work. Not necessarily doing what we wanted to do, but jobs that paid enough to make us get up in the morning.

That was 25 years ago. Men and women in India, Bangladesh and other developing countries were looking for work in the same way as we were in Pakistan. There was parity.

Now when I talk to people in India and the Philippines, Ukraine and Russia, Brazil and Poland, I find that unlike Pakistan, a growing number of employable youth in these countries are not looking for a job. They are interested in gigs. And that reflects the structural change in the post-modern job market across the globe.

The millennial generation across the world prefer being self-employed instead of becoming an employee. They can do that because of advances in computer and telecommunications technology. But these successful service providers (individuals) at portals such as eLance, Guru, oDesk, iFreelance had to change their attitude towards work.

Taking advantage of the rapid pace of technological change, a globalised market place and a boom and bust economy, millions of workers have found security in the idea of free agency. And, this spirit of enterprise has produced workers around the world that are more resilient, adaptable and entrepreneurial than their predecessors.

I personally know hundreds of successful individuals around the world who have traded in careers for gigs.

In the US this trend is pretty established. According to the Online Talent Report, more than 100,000 businesses listed 300,000 new jobs last year. Last month alone, the number of jobs posted grew by 30 percent from the previous month. And that trend isn’t exclusive to the United States and Europe. Data shows that there are online and self-employed workers all around the world with India leading the curve.

Demand for certain types of jobs such as mobile application programmers and social media management is far outstripping supply. So far, small businesses are the first to look for talent online. But larger enterprises are following, as well. AT&T, IBM, Cisco, Novartis, P&G and Kimberly Clarke are among a few that you will find posting transactional opportunities through their contractors or directly. Many more are expected to follow the suit.

Test this: go to craigslist.org for Pakistan and look for jobs/services offered and than go to any of the large Indian city and you will find that entire country of Pakistan has less than 10 percent postings compared to any Indian city. I am always told not to compare us with India because we are ‘special’. OK, just compare Pakistan and the Philippines and there is a difference in order of magnitude.

After speaking to several people in Pakistan, I realise that there are some real challenges that make it rather difficult to work from home. I will address that below. But I want to first dispel some established myths about the online marketplace first:

MYTH No 1: All jobs are posted by American and European employers and they don’t want to hire Pakistanis for several reasons.

Reality: Online hiring is not asymmetrical. It is a misnomer that service providers are from low-cost destinations and all buyers are from the United States and Europe. Some basic research will show that employers from across the world are taking advantage of a flexible workforce. With the Internet, the search for talented employees is no longer limited by geography. And, the same tool allows professionals to find work from anywhere, as well. I live in New York and I have provided services to employers in Indonesia, the Philippines and Brazil. And, I am just an individual.

Also, I have yet to find an American who will refuse a talented resource from any part of the world. Money transcends national boundaries and religion. Any Indian and Israeli employer will be happy to hire someone from Pakistan if the service is good and priced competitively. It is all about adding value.

MYTH No 2: Online jobs are for programmers only.

Reality: You don’t need to be a programmer to work online. Whether you are skilled for sales and marketing, finance and management; administrative or legal; engineering or manufacturing, you can work remotely. A majority of jobs today can be outsourced except those require a physical presence. Many of us have a full time administrative assistant (Executive Secretary, as they are called in Pakistan) sitting thousands of miles away.

There are several MBAs from leading institutions who provide management or marketing or sales-related services. Project Management work is pretty much done remotely. My brother works for IBM and he could be sitting anywhere in the world to do his job, and do it well.

I know several individuals in India and the Philippines who provide writing services to employers all around the world. And, you don’t need to be Mark Twain to find online gigs for writing. On an average, an individual who works eight hours a day can easily earn $600 to $2,500 per month, depending on their skills.

Accounting and legal services are also quickly emerging. I know several bookkeepers in Brazil and Argentina who provide accounting services to small businesses around the world. I know several lawyers who have paralegals sitting in India to do research and prepare court papers. The opportunities are endless.

Now let’s talk about some real challenges that an individual from Pakistan will have compared to their peers from across the border.

Challenge No 1: Many young middle class men and women do not have a credit or debit card and, thus, cannot sign up for services such as eLance, Facebook, iFreelance. There are at least two ways to address this; open a checking account with a global bank that has branch near you and make sure they will issue a debit card that can be used internationally. Or open accounts where you don’t need a credit card such as oDesk or post your services in places like Craigslist.

Challenge No 2: There is so much power outages that even if we get work (which is easy to find) we can’t deliver on time and, therefore, get negative feedback from employers.

I know this is real. We have more power outages than India, for example. I have no magic wand, but I will tell you if my livelihood was dependant on electricity, I would make secondary and tertiary plans to have minimum power to run a computer. I get a push back that we don’t have enough money to buy a UPS or generator. What about setting up small cooperatives with your friends and neighbours? Why don’t four or five of you get together and make it happen? The return on investment is so rapid and it will change your life. So what are you waiting for?

Challenge No 3: How will I get paid? Open a bank account or PayPal account (or other similar services). Of course, there may be a time when you put in several hours, and may not get paid, but there are ways to mitigate that risk. When you work with an established service you are pretty much guaranteed about the payment. These services charge a couple of points to cover your risk. But you will get paid.

Here is a challenge that many learn after they start offering services online: not everyone can work from home. You need lots of discipline because there are plenty of distractions when you are working from home. But I know several individuals in Pakistan, as well who do it really well. Setting up a place of work at home is a serious matter and requires careful planning. You must be comfortable to produce good quality work. You must be able to get up, take a shower (or not) and go through the routine as if you were going to work outside. Once you get to your desk you must be able to tune out your family and surrounding.

It is not that there are no Pakistanis. I see a few firms as top tier providers on oDesk, eLance and Guru. But there are a very small number of independent Pakistani individuals.

Here is my challenge to you: if you are educated and unemployed (BA, BCom, BSc at minimum) establish your practice online and make your first $100 and post a comment to let us know that you are on your way to making millions.

Despite market’s’ southward movement, IMF today said that Pakistan’s economy is getting back on track after a balance of payments crisis 18 months ago but it still remains vulnerable to shocks and a risky market for investors,

At the end of the session the institutional buying of select stocks recovered 71 points after declining to 330 points earlier in the day.

Overall trading improved to 135.439 million shares from Monday’s 73.667 million shares.

Hasnain Asghar Ali at Aziz Fidahusein Co said that the first trading session witnessed positive numbers because of appreciating status quo in the monetary stance and imposition of new taxes on economy, and through low quantum strength in the index heavyweights.

Later, these confidence-building measures failed to contain nervous sellers because margin calls led sell-off by financial institutions enhanced the panic in the market leading to its sharp fall.

Corporate support helped in halting the downward trend and recovering 71 points before the end of the day. Traders dealt with the situation by readjusting their equity portfolios in accordance with the prescribed limits while the possible buyers holding back to trim down their holdings at available rates.

Market capitalization fell to Rs 2.657 trillion losing Rs 74 billion.

Trading at Karachi Stock Exchange is expected to follow the downturn tomorrow because of the anticipated amendments in the post budget-trading pattern.

All Pakistani Stock Exchanges followed a sliding pattern on Tuesday with LSE-25 index losing 83.99 points to reach 2962.82 points against 3046.81 points of Monday, and ISE-10 index declining from 2,362.90 to 2,330.38 points dropping 32.52 points.

In a related development IMF today suggested that political uncertainty, chronic insecurity and a budget deficit inflated by spending to tackle a militant insurgency are all threats to recovery but the outlook is far brighter than when Pakistan was on the brink of default in 2008.

Paul Ross of the International Monetary Fund (IMF) told Reuters in Islamabad today: “in terms of the economy, stabilisation seems to be taking hold … progress has been made.”

Pakistan turned to the IMF for an emergency package of loans in November 2008, when inflation was 25 per cent, central bank reserves were the equivalent of just one month of imports and the current account deficit had widened to 8.5 per cent of gross domestic product for the fiscal year 2007.

Despite signs of modest recovery, the State Bank policy statement was skeptical because the economy lacks the necessary infrastructure and sufficient macroeconomic stability to build on the momentum.

Policy statement which sent Pakistan’s leading market, Karachi Stock Exchange running for cover said that the worsening power crisis, and fiscal weaknesses, continue to impede sustainable recovery and comprehensive macroeconomic stability.

KSE-100 index plummeted from 9770 to 9,687 at the end of the session, shedding 183 points.

Overall trading remained on the lower side with only 79 million shares traded in the day. In the first session traders stayed on the selling spree avoiding buying that brought the index down to more than 150 points.

Today’s trading activity displays traders unease with the anticipated amendments in the post budget-trading pattern.

Traders dealt with the situation by readjusting their equity portfolios in accordance with the prescribed limits while the possible buyers holding back to trim down their holdings at available rates.

Trading activity is expected to remain low in the next session.

Foreign investment in Pakistan during the same period last year was $2.21 billion in the same period last year and the current account deficit was $8.982 billion.

Analysts point out that higher current transfers and receipt of logistical support payments from the US contribute to lowering deficit. The US embassy said this month it had released $656 million to Pakistan from its so-called coalition support fund for costs incurred last year in fighting Islamist militants, with $188 million transfered in late April 30 and $468 million in May.

The $188 million is reflected in the current account data for April and analysts said the remaining $468 million will be reflected in May’s data which should show a further narrowing of the deficit.

The trade deficit for the July to April period of the 2009/10 (July-June) fiscal year was $12.24 billion, compared with $14.22 billion in the same period last year.

Analysts said they expected the current account deficit to keep narrowing on falling international oil prices.

“We see a similar trend continuing in coming months with the recent decline in international oil prices further helping lessen pressure on the BOP (balance of payments),” Qureshi said.

Oil fell below $70 a barrel on Monday, its lowest in more than three months, extending a loss of nearly 17 percent over the past two weeks on fears over Europe’s debts, the weak euro and swollen US oil inventories.

Pakistan recorded a provisional current account deficit of $185 million in April compared with a provisional $40 million in March.

In a quarterly report on the economy released in March, the central bank lowered its forecast for the 2009/10 current account deficit to 3.2-3.8 percent of gross domestic product, from previous estimates of 3.7-4.7 percent.

An International Monetary Fund (IMF) emergency loan package of $7.6 billion agreed in November 2008 helped avert a balance of payments crisis and shore up reserves.

The IMF increased the loan to $11.3 billion in July and approved the fifth tranche of $1.13 billion on May 14.

But foreign investment in Pakistan continues to face decline. Out of total foreign investment, foreign direct investment fell 44.7 percent to $1.77 billion in the July to April period, from $3.20 billion in the year-ago period, the State Bank said.

Worsening security situation, with a Taliban insurgency in the country’s northwest, coupled with chronic power shortages, have kept risk averse investors out of the country .

There was a net outflow of $46.6 million of foreign portfolio investment in the first 10 months of this (July-June) fiscal year, compared with a net outflow of $992.6 million in the same period last year.

Authorities imposed a floor on the Karachi Stock Exchange benchmark index in August 2008 as political uncertainity and economic and security worries drained investor confidence.

The floor discouraged new investment and also led to a sharp outflow of funds, as foreign investors sold holdings in off-market trade.

Pakistan had requested for a waiver for its inability to meet quarterly budget deficit target and net government borrowing limits from the State Bank of Pakistan.

Murilo Portugal, IMF’s deputy managing director and acting chairman said, “preparations for important and politically difficult tax reforms have moved forward, and there has been steady progress in financial sector reform”.

IMF has approved total of $10.66 billion loan for Pakistan and with the release of $1.13 billion it has disbursed $7.27 billion so far. IMF has also accepted Pakistan’s request to merge the remaining three payment instalments into two. The IMF said Pakistan has missed two conditions because of the delay in getting pledged aid from other nations.

Portugal said, “Pakistan’s vulnerabilities remain high, due to persistent inflation, security-related spending pressures, energy-sector problems and shortfalls in revenue collection and external financing”.

United States is exerting pressure on Pakistan to send troops to North Waziristan to fight Taliban who claimed responsibility for the recent failed bombing attempt in New York. The IMF announced its readiness to adjust Pakistan’s budget deficit and borrowing targets to let Pakistan manage necessary funding for such priority programs as security.

Portugal said, “these challenges highlight the importance of pursuing a credible fiscal consolidation, maintaining a flexible exchange rate and a cautious stance to monetary policy, and improving governance”.

IMF accepted Pakistan’s request to increase the end-June 2010 budget ceiling by 0.15 percent of gross domestic product, and the floor for net foreign assets of the State Bank of Pakistan was raised by $300 million.

Leveraged ETFs can be defined as Exchange Traded Funds that use a combination of derivative and debt to enhance returns for investor. Here is a simple example of how a leveraged ETF works.

Let us say a leveraged ETF tracks the S&P 500 Index. Assume that for every invested dollar in the fund, it uses $1 in debt. Now, if the index moves up by 1%, the fund will give the investor a return of 2%. So, for every $100 invested by the investor, they will get a return of $2 in a leveraged fund, whereas in a normal ETF, return will be merely $1.

Of course, there will also be transaction cost, management fees and the interest on the debt, which will reduce some of the return on a leveraged fund. So, the investor who invests $100 in such a fund will probably make $1.50, if the index moves up by 1%. That is 50% more than what they will make in a normal fund.

But, is the risk worth taking? We don’t think so.

Why Leverage is not a great idea?

Well, a lot could go wrong if you are leveraged. One just needs to look back at the financial crisis and see how dangerous leverage can be.

Banks and hedge funds that went bust during the financial crisis were all highly geared. Even before the financial crisis, there have been hedge funds that have gone bust because they were highly geared.

From Long Term Capital Management, the famous hedge fund that had Nobel laureates in its ranks, to Amaranth, whose star trader was one of the highest paid hedge fund managers in the world at one time; there have been many funds that have collapsed due to high leverage.

Lehman Brothers, the investment bank that survived the Great Depression, collapsed in the financial crisis as it was geared 40 times, i.e. for every $1 of equity; Lehman was using $40 in debt.

Now, you stand to make a stellar return on equity if things go in the direction you want them to go, but can go horribly wrong if they go only slightly against you. And leveraged ETFs are no different.

So what could go wrong with a Leveraged ETF?

Let us look at an example of how things could go wrong in a leveraged ETF. Suppose you have a leveraged ETF that is tracking the Japanese Index. Now, let us assume that the fund is geared 3 times, i.e. for every $100 invested in the fund; it uses $300 in debt. If the Japanese Index moves up 1% – the direction you want it to move because you are long the index – you make $3. After deducting all the costs, you are left with $2.50. A decent return, and more than what you could have made in normal fund. But, if the index moves in the opposite direction, i.e. it goes down by 1% you have lost 3% of your equity.

And imagine how the loss will accentuate if the index drops by 10%. You would lose 30% of your equity in just one day. And let us say you were geared 4 times instead of 3. Now you lose 40% of your equity. No wonder that highly geared banks and hedge funds were wiped out in a day.

Understanding how leveraged ETFs work

One very important thing for investors is to understand is how these leveraged funds work. A fund that is geared two times, promises to generate double the return of the index it is tracking. Theoretically, this means that if the Dow Jones returns 20% in a year, a 2x fund should return 40%. However, this is not the case as the fund tracks daily changes in an index and so they may double your daily return, but things could be different when we talk about annual returns.

Let us get back to the $100 we had invested earlier. To simplify the example, we are not assuming any costs and management fees for the fund. Now, if the index goes up 10%, you gain 20%, assuming the fund is geared 2 times.

So, your $100 is now $120. Because the fund has to balance the leverage ratio and keep it at two times, it will have to adjust the debt level by increasing it by $20. So, now you have $120 in equity and $120 in debt.

Now, the next day the same index drops 10%. You lose $24. Your equity is now down to $96. So, you have lost more than the index. Yes, on a daily basis, your gains and losses are double that of index. But over a two day period you have lost $4, 4 times what the index lost. If you were invested in a normal ETF, you would have been at $110 after the 10% gain on day one, and been down to $99 after the 10% loss on day two. So, overall, you would have lost $1. But with a leveraged ETF, you stand to lose $4, 4 times what you would have lost in a normal ETF.

Tracking Emerging and Frontier markets

Till now, we have only spoken about leveraged ETFS. What if you have a leveraged ETF that tracks an index of an emerging or frontier country? Yes, you can make a lot of money by investing without using any leverage. Imagine the returns you can make if you are geared. There are ETFs that track indexes of some of the most volatile stock markets in the world. Some of these markets see huge jumps and falls on daily basis. And like we explained earlier, daily changes can have tremendous impact on leveraged ETFs.

Leveraged ETFs on indexes of volatile markets can generate stellar returns, if the markets go in the favored direction. But, investors stand to lose big time, if their bet goes wrong.

A final word

Through this article, we have explained the effect leverage can have on your returns. Using leverage to enhance returns is a great idea, if you can predict the direction in which the markets will move. Some years ago, Long Term Capital Management thought it could do this, with the help of a star studded team and the most sophisticated investing strategies.

But, it only took a few days of losses and the fund went bust.

This article originaly appeared Dollars Magazine www.dollarsmagazine.com

In active forex trade Pak rupee lost 11 paisas against the dollar to close at 84.10 rupees to a dollar in the open market from the last week’s trading day close of 83.99. Trading activity was thin in the currency market during the day. The rupee depreciated over short supply of dollars as exporters were not active.

“The global markets open for the day trade in evening as per Pakistan Standard Time, which hampered the inflow of dollars,” said Owais-ul-Haq, dealer at IGI Securities. He hoped that inflow of dollars would stabilise the rupee on Tuesday.

In the intra-day trading the rupee touched day-high of 84.13 rupees to a dollar but eased to 84.10. The rupee was stable during the last week on higher inflow of dollars in terms of remittances and lower demand of import payments.

Currency experts forecast that rupee would strengthen as some pledges of investment made by companies in telecom sector. The further growth in remittances would also support the local currency to improve against the dollar, dealers said.

The country has received remittances to the tune of $6.55 billion during the first nine months of the current fiscal year showing growth of 16 percent over the corresponding period of the last fiscal year. In inter-bank trading the rupee was stagnant and the buying and selling stood at 83.90 and 84.10 rupees to a dollar.

For economies like Pakistan, funds repatriated by non-residents to family and friends back home, provide the most tangible link between migration and development. But September 11attacks, it has become increasingly difficult for Pakistanis to get work visas which had resulted in negative growth of remittances.

Analysts believe that latest increase is due to strict regulation of foreign exchange market. Majority of the informal money transfer and forex firms have changed their business practice or disappeared.

Analysts point out that since remittances are unilateral transfers they do not create liabilities. And they usually come with advice—from migrants who have seen better—on how to best use them. Thus, remittances are not simply money, but value-added money.

NRPs sent $588.78 million in February 2009 compared to $641.32 of February 2010, reports Dollars Magazine. The inflow of remittances in July-February, 2010 period from UAE, USA, Saudi Arabia, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $1,317.17 million, $1,173.37 million, $1,148.86 million, $826.93 million, $596.26 million and $171.41 million respectively as compared to $1,035.55 million, $1,156.51 million, $962.30 million, $783.39 million, $344.08 million and $150.05 million respectively in the July-February, 2008-09 period.

Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during the first eight months of the current fiscal year amounted to $550.65 million as against $486.34 million in the same period last year. The monthly average remittances for the July-February 2010 period comes out to $723.36 million as compared to $614.83 million during the same period of last fiscal year, registering an increase of 17.65 percent.

During February 2010 remittances from Saudi Arabia, UAE, USA, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $149.45 million, $136.88 million, $111.48 million, $89.21 million, $45.91 million and $13.48 million respectively as compared to $123.64 million, $166.62 million, $127.48 million, $93.09 million, $54.12 million and $18.31 million in February 2009. Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during February 2010 amounted to $41.13 million compared with $58.04 million in the same month of last year.

The true size, including unrecorded formal and informal flows, is believed to be significantly larger. Remittances total at least three times official development assistance and are the largest source of external financing.

Buy rate for dollars in the interbank market today were Rs. 85.00 and sell rates were Rs.85.05. In both directions Pakistan rupee was standing strong.

During the Asian trade dollar fell to its lowest in more than two months against yen as investors dumped long positions against other currencies that had built up to levels not seen in more than a year.

Investors have been picking up dollars in recent months as Greece’s credit and fiscal woes hit the euro and worries over a potential hung parliament and speculation that Britain’s asset-buying scheme could be revived knocked the pound lower.

The rupee was higher by 20 paisa against the US currency for buying and selling at 85.20 and 85.40 in open market. The dollar touched a two month low against the yen in Asia on Wednesday due to selling by Japanese exporters, falling long-term U.S. interest rates, and expectations for weak U.S. jobs data.

During Asian trading hours, the dollar fell to Y88.47 on EBS, the lowest since Y88.32 on Dec. 14. That compares with Y88.75 in New York late Tuesday.

If coming U.S. data are weaker than expected, adding to speculation that the Federal Reserve may not start raising its policy rate as soon as had been expected, U.S. yields could fall further, causing the dollar to decline more against the yen, Inoue said. He tips the dollar to trade in a range of Y83.00 to Y91.00 in the coming days.

However, Pakistan rupee lost 50 paisas againts the euro: buying and selling at 114.85 and Rs 115.35. The euro had hit a two-week high Wednesday against the dollar in a sign that Greece’s stepped-up efforts to cut its gaping budget deficit has helped calm investors fears over a possible debt crisis.

But the reprieve for the common currency may not last: There is no assurance the Greek measures will be fully implemented nor was there any word from Germany or France, the euro zone heavyweights, whether they would offer more than just verbal support to the debt-laden Greeks.

Investors are now waiting to see whether “an actual bailout will happen,” said Jessica Hoversen, fixed-income and foreign-exchange analyst at MF Global in Chicago.

State Bank of Pakistan

According to State Bank Of Pakistan the FDI flow into the state during July to November period of this fiscal year fell by 54% but when combined with portfolio investment reported a decline was 25.6%.

State Bank in an email stated, “investments have fallen to $1.18 billion from $2.59 billion a year earlier. Global funds bought $290.7 million more Pakistani stocks than they sold in the seven months, compared with net sales of $355.8 million a year ago.”

In Geneva on 19 January 2009 , Global foreign direct investment (FDI) inflows were estimated to fall by 21% in 2008 to an estimated $1.4 trillion, and were estimated to further decline in 2009.

Political instability, terrorist attacks, power, gas and water shortage and weak law order control has led to falling trend in FDI. These are the major reasons due to which the foreign investors are not interested in investing their capital in Pakistan.

Pakistani firms are unable to sign agreement with foreign investors due to the prevailing abysmal law and order situation.

According to economists, “although the global economic meltdown was also a reason of slow growth in FDI, the domestic shocks were major contributors in the declining trend of FDI. November was the third consecutive month in which the country posted decline in foreign direct investment. We were expecting some increase in the FDI during the current fiscal year ahead of positive economic indicators. The ongoing war in the northern areas and suicide attacks in different cities had restricted the foreign buyers from new investment in Pakistan.”

The State Bank of Pakistan (SBP) on has said, “FDI had posted a decline of 52.2 percent during July-November period of current fiscal year. Although, some increase was registered in portfolio investment in the first five months of current fiscal year, FDI still remained on decline.”

FDI reduced to $774 million during July-November of current fiscal year in last fiscal year it was $1.62 billion, depicting a decrease of 846.7 million dollars. Portfolio investment have reached to $311.3 million in July-November of fiscal year 2010. In 2009 it was 162.9 million dollars. The government expects gross domestic product will grow 3.3 percent this fiscal year.

Current global economic recession, and falling profits have caused many companies to cut capital expenditures and reduce FDI. This economic crisis has affected every region with varying geographical impacts. This crisis originated in developed countries and their major effects on the developing world have been indirect up till now which has affected FDI flow.

The share of foreign direct investment, flowing into Pakistan, is negligible when compared to the opportunities and economic fundamentals of the country. The FDI inflow into the country is less than one per cent of its total, made globally. Since 1996, when received highest amount, FDI in Pakistan has been experiencing a declining trend.

According to UNCTAD, “all experienced sharp foreign direct investment declines, except for the Netherlands and China. The overall environment for international investment is slowly improving. As a consequence, it expects global FDI flows will rebound modestly in 2010. The economists say improving conditions will ultimately encourage companies to invest more in foreign countries this year, prompting a stronger recovery in 2011.”

To emerge as a promising nation Pakistan has to provide conductive environment for external economic flows.

Foreign direct investment (FDI) in Pakistan is a major external source to meet obligations of resource gap, human resource development and goal achievement. The FDI has played a vital role in the economic growth of Pakistan.