Project: Finance

Appendix
FOREIGN DIRECT INVESTMENT

20
 ARTICLES ATTACHED
Serial Article Year Source
No.
1 Foreign direct Investment up by 2004 Record
19% er
Report
2 FDI resisters sharp rise during 2006 Record
fiscal year er
Report
3 Pakistan textile city & foreign 2006 Record
direct investment er
Report
4 Local & Foreign investments 2007 Record
grow by 20 percent er
Report
5 Pakistan’s Success story: 2007 Southasia
investor.co
Foreign Direct Investment m
6 Major economic targets 2007 Record
achieved er
Report
7 July – January Foreign 2008 Record
Investment down by 35 Percent er
Report
8 A Decline of 44 Percent in 2008 Record
Foreign Investment er
Report
9 Foreign investors ready to 2008 Record
invest in Pakistan er
Report
10 FDI: Linked Policies to be 2008 Record
continued: Dar er
Report

36
36
 (1) FOREIGN DIRECT INVESTMENT UP BY 19 PERCENT
RECORDER REPORT

KARACHI (July 26 2004): The direct foreign investment in the country witnessed a surge of 19 percent
after the country sold two cellular phone licenses and strategic stake in Habib Bank.

Overseas investment amounted to $949 million in the fiscal year ended June 30, 2004, compared with
$798 million in the previous year, according to data posted on the Web site of State Bank of Pakistan.

Pakistan in April auctioned two cellular phone licenses for $291 million each to Oslo-based Telenor ASA
and United Arab Emirates-based Warid Telecom. The companies paid half the bid amount in May.

In December 2003, Pakistan sold 51 percent of Habib Bank to the Geneva-based Aga Khan Fund for
Economic Development.

The US led the overseas investment in the 12 months with $238.4 million compared with $211.5 million
in the year ago period, while investment from Switzerland amounted to $205 million and United Arab
Emirates $134.6 million.

The country is seeking foreign direct investment of $1 billion at the start of the current but is expected to
revise it upward to $1.25 billion during 2004-05 against $950 million of last financial year.

Official sources said that the ministry of privatization and investment would soon be announcing an
increase of $300 million in the foreign investment target for the current fiscal year.

The government believes that ever since the security environment has improved in the region due to
lessening of tension with India and Afghanistan, there exist more opportunities to enhance foreign
investment in the country.

In fiscal year 2003, foreign direct investment almost doubled to $748 million after the country sold
United Bank Ltd to a group comprising United Arab Emirates-based Abu Dhabi Group and the UK's Best
way Holdings.

Copyright Business Recorder, 2004

36
 (2)FDI RESISTERS SHARP RISE DURING FISCAL
YEAR 2006
RECORDER REPORT

KARACHI (December 03 2006): The Foreign Direct Investment (FDI) flows in FY06 amounted to $2.0
billion, registering a sharp rise of 70.6 percent over the preceding year out of which telecommunications
sub-sector fetched more than half of the FDI during FY06 compared with about one-third FDI under this
head in FY05.

During FY06 privatisation proceeds have registered an unprecedented rise to $1.5 billion mainly on
account of PTCL sale to a UAE based company, sale of 73 percent share of KESC to a Saudi group and
receipts for Habib Bank privatisation. Desegregated Foreign Direct Investment (FDI) data reveals that
sectoral distribution is narrow during FY05 and FY06.

In particular, the telecommunications sub-sector fetched more than half of the FDI during FY06
compared with about one-third FDI under this head in FY05, said the Annual Report FY2005-06 issued
by the State Bank of Pakistan.

While during FY05 dominance of telecommunication in total Foreign Direct Investment was mainly
attributed to liberalisation and rapid expansion in the cellular network in the country, the FY06
acceleration is principally driven by the privatisation of PTCL.

This also suggests that FY07 FDI is likely to be lower than the levels achieved in FY06. It is also
important to note that not only about half of the FDI originated from the Middle East, FDI from different
countries and regions is also concentrated in a specific sector.

For example, 95.5 percent of Foreign Direct Investment from the Middle Eat is only in communication
sector during FY06. While about 40 percent of FDI from UK and USA focused in telecommunication and
oil and gas exploration sectors during FY06.

Copyright Business Recorder, 2006

36
 (3) PAKISTAN TEXTILE CITY & FOREIGN DIRECT
INVESTMENT
RECORDER REPORT
KARACHI (JUNE 24, 2006) Several local and international groups including some renowned
investment groups from China and Turkey have shown keen interest to invest in setting up their own
zones in the proposed Textile City to be established over an area of 1250 acres here near Port Qasim.
Brisk preparations are now afoot for the ground breaking ceremony which is likely to be held sometime in
the last quarter of this year. The Chief Executive Officer (CEO), Pakistan Textile City (PTC) Zahid
Zaheer in an exclusive interview with Business Recorder said that the project has tremendous attraction
for the Chinese and Turkish investors who have indicated their willingness to establish their own zones in
the city. The CEO said, we are committed to provide basic facilities at the textile city to attract foreign
investors who are now looking towards Pakistan as an attractive place for setting up their industries. A
MoU was signed with the Chinese industry Temsad for joint co-operation. We have invited their
businessmen and offered joint ventures with them, he said. About the formal launching he said that the
board has decided to start work on the available land because we are an authority within authority. He
said after the inauguration the project would start generating income and then we would look for other
options. We have spent over two years on feasibility and other projections and we do not want to waste
our efforts for other land proposals, he affirmed.

The CEO said the launching of Karachi Textile City project would be a role model for launching
such cities in other parts of the country. Zahid Zaheer said Pakistan's textile exports stood at 67 percent
and it would get a big boost after the completion of the project. Many business-friendly opportunities
would be available for the international investors at the textile cities, he said adding, we have cheap
labour and the cost of production is low as compared to other countries. He said it was not easy to attract
textile producers to set up industries in other countries. But the opportunities we are providing are much
more attractive for foreign investments. He said that the main focus is on China and Turkey because of
Pakistan's close historical links and geographical proximity with them. Although India, Bangladesh and
Sri Lanka being our competitors are offering the same facilities, they prefer coming to Pakistan because
of these links he added. The cotton produced locally has made Pakistan a better proposition than its
competitors, he said. China's interest in the Textile City is vital for its industry. While Turkey has also
shown its interest because, the CEO explained. Turkey was joining the European Union and it would face
many problems in textile manufacturing. About the land allotment he said it would be on first come first
served basis. He said one to 10 acres of land would be allotted and it could be customized. He said that
the government would be willing to provide 400 to 500 acres of land to any country interested in
establishing their textile zones in the country. He said person eligible to buy the land at the PTC are those
who have strong financial background. We are looking for genuine buyers, he added. He said that
technical support, one stop bureaucracy and security were the main facilities among basic utilities. He
informed that the city would be partially a tax-free zone and partially non-tax free zone. But the issue was
not resolved till now. About the power supply he said 100 MW would be provided to the city and it would
be enough initially.

He also said there would be no restriction on any industry for setting up its own independent
power projects. About water supply he said 20 million gallons have been approved. The Prime Minister
also approved 700 million rupees for a water pipeline with 48 diameters. Half of money would be
provided by the federal government and remaining from the provincial government. The water would
come from the K-3 project, which was inaugurated by the President of Pakistan, recently. About the local
industrialists he said daily many phone calls are received regarding the project and they were keen to start
their business at the Textile City. About the foreign direct investment he said when the project is initiated
obviously the environment would attract the business community. But it was too early to tell how much
investment would arrive. Advertisement campaign is not in our plans now we however, are concentrating
on settlement of the land issue. We organized a road trip in Turkey to make them aware about the project,
he said.WTO implementation would increase competition, he said and added, considering that we have
made a plan to reduce the cost of business and provide them cheap raw material.

36
 We will maintain the WTO standards like implementation international norms, treatment of labor
and avoid hazardous material, he said. He hoped that many entrepreneurs from the US and Europe would
be attracted towards the PTC when they find an investment-friendly environment. About the completion
of the project he said we are trying our best to complete the project as soon as possible. About the
position of land acquired for the Textile City, he explained that the board of directors of the PTC had
decided that 550 acres of land out of 1,250 acres allocated which is still under negotiations would not be
surrendered. The Prime Minister has ordered the Port Qasim Authority (PQA) to hand over the entire
allocated land to the PTC but the PQA was able to hand over only 700 acres and discussions were on for
the possession of the remaining 550 acres. The Port Qasim Authority has assured the PTC that whenever
the provincial government gave the land they would hand over the same to the PTC. The board has
decided that till the issue is finally resolved the PTC will carry out work on available land, said the CEO.

36
 (4) LOCAL AND FOREIGN INVESTMENTS GROW BY
20 PERCENT: SHAUKAT AZIZ
RECORDER REPORT

LAHORE (December 20 2006): Prime Minister Shaukat Aziz has said that domestic and foreign direct
investments have grown by 20 percent, which is the highest in the last two decades.

Addressing the 22nd Annual General Meeting and Conference jointly organised by Pakistan Society of
Development of Economists (PSDE) and Pakistan Institute of Development Economics (PIDE) here on
Tuesday, he said the improving economic growth had started to cast its impacts on all segments of society
as unemployment and poverty were declining significantly.

The government's financial reforms and privatisation strategy had led to a vibrant trade sector that was
empowering the consumer for the first time, he added.

Through prudent economic management, first generation reforms of fiscal consolidation, debt reduction,
deregulation, privatisation, and transparent governance, Pakistan's economy had grown at an average rate
of almost 7 percent per annum during the last four years, he maintained.

"Our government is committed to good governance through transparency and accountability. Democratic
institutions have been strengthened while a deep-rooted process of decentralisation has been set in
motion, the Prime Minister said.

He further said that the government was committed to a continuous process of reforms and had embarked
a second generation of reforms covering infrastructure up-gradation, institution building and human
resource development. He said the government agenda of second generation structural reforms had three
prongs, which were mutually reinforcing to achieve good governance and institutional strengthening.

Aziz further said that the government was determined to a market based economy and in this connection
it was deregulating markets and improving supervision and regulation of markets to ensure greater
competition.

"We have also been developing deeper and more liberal agricultural markets by allowing market based
agriculture pricing, free movement of commodities and introducing private sector in wheat operations.
We have also developed markets in media, energy and telecom sectors," he noted. The government was
developing policies and regulatory mechanism that were aligned to global norms. He further said.

"We have thus adopted measures for better tax and tariff policy including better tax administration. Our
fiscal responsibility and debt Limitation Act 2005 puts a check on the mismanagement of fiscal policy by
future governments," Aziz said.

As part of the drive to strengthen institutions, the government had already launched initiatives to
modernise several of the key agencies of government including judiciary, civil service, monopoly control
authority and the police, he said.

This will of course be done by deepening decentralisation, developing greater transparency, utilising the
latest technology and relying on a high degree of professional and technocratic management, he added.

The Prime Minister said that commercial, regulation and corporate laws, which defined and protected the
rights of investors in debt and equity markets, needed to be constantly updated so that the legal
framework facilitated market transactions and protected the rights of all transactions.

The Securities and Exchange Commission of Pakistan (SECP) had actively been pursuing a reform
roadmap to develop an efficient corporate sector and capital market based on sound regulatory principles.

"We have provided security to minority shareholders and made efforts to bring transparency and better
management and governance structure in the private sector," Aziz maintained.

36
He stressed upon the quality of law enforcement and said that it was the enforcement of good commercial
laws, rather than their mere existence, which encouraged economic agents to engage in market
transactions with each other. Access to justice including a fair and quick disposal of court cases was best
viewed as a basic constitutional right while efficient justice system expedited economic transactions,
ensured sanctity of contract and protected the marginalised groups, the Prime Minister observed.

"Our real challenge is to devolve effective power, citizen empowerment, community based accountability
and financial autonomy to the lowest level of local government. It is indeed necessary for effective
decision and implementation system down to the grass root level," he said.

He called for developing and implementing an agenda of second generation reforms that provided the rule
of law, political stability, economic progress, security of life and property and an efficient transparent and
accountable government. Earlier, speaking on the occasion, Director PIDE and President PSDE
Nadeemul Haque highlighted the role and achievements and future plans of the society.

He also elaborated the efforts made by the society for collaborating with several Pakistani educational
institutions, scholarship programme, conducting conferences and research work.

Copyright Business Recorder, 2006

36
 PAKISTAN'S SUCCESS STORY: FOREIGN DIRECT
INVESTMENT
SOUTHASIANINVESTOR.COM
Written by RiazHaq on /5/2008
From: southasiainvestor.blogspot.com

Talking about foreign direct investment (FDI) in emerging economies, former US Federal
Reserve Chief Alan Greenspan says: “But clearly the Licence Raj (in India) has discouraged foreign
direct investment. India received $7 billion in FDI in 2005, a sum dwarfed by China’s $72 billion. India’s
cumulative stock of FDI at 6 per cent of GDP at the end of 2005 compares with 9 per cent for Pakistan,
14 per cent for China, and 61 per cent for Vietnam. The reason FDI has lagged badly in India is perhaps
no better illustrated than by India’s unwillingness to fully embrace market forces. That is all too evident
in India’s often statist response to economic problems. Faced with rising food inflation in early 2007, the
response was not to allow rising prices to prompt an increase in supply, but to ban wheat exports for the
rest of the year and suspend futures trading to ‘curb speculation’ — the very market forces that the Indian
economy needs to break the stranglehold of bureaucracy.” (p. 322 of "The Age of Turbulence" by Alan
Greenspan.)

Since Mr. Greenspan wrote the words above, the FDI in Pakistan has continued to rise
and remains a success story. The total investment grew by 21.4 percent or 23 percent of the GDP and
Foreign Direct Investment (FDI) posted a growth of 71 percent from US $ 3.5 billion to US $ 6.0 billion
in 2006-07. The FDI represents a deeper and longer term commitment than portfolio investments which
tend to be less durable and less reliable. This has happened in spite of the continued political instability
and security issues.

As Mr. Greenspan points out, this dramatic increase in FDI for Pakistan has been made possible by the
Pakistani government's liberal policies of allowing foreign investments in many sectors of the economy
and the ability of the foreign investors to repatriate 100% of their profits in US dollars. These profits have
continued to rise as the Pakistani economy has boomed with the GDP doubling over the last 5 years.
Foreign investors sent $519 million as their profits abroad during first seven months of the current fiscal
year as compared to $467.9 million of the corresponding period of 2006-07, depicting an upsurge of some
11 percent.
State Bank's statistics show that profit repatriation by foreign investors registered a significantly increase
of $51.4 million during July-January of the current fiscal year. The major share of repatriation was seen in
the power sector, in which foreign investors have made new investments during the last few years due to
the power shortage in the country, reports the Business Recorder, a Pakistani financial daily newspaper.

One of the downsides of liberalization has been an upsurge in inflation in Pakistan which India has
attempted to curb by actions such as banning export of wheat and suspending futures trading which
Greenspan criticizes in his book. While India has succeeded in the short-term in controlling wheat prices,
the longer term consequences of such policies are usually detrimental to the economy.

36
 (5)MAJOR ECONOMIC TARGETS ACHIEVED
RECORDER REPORT

KARACHI (October 30 2007): Pakistan has achieved major economic targets, including real gross
domestic product (GDP) growth, agriculture, services sector, investment, tax revenue during 2007 fiscal
year.

At the same time it missed the targets in sectors like manufacturing, large scale, consumer price index
(CPI), sensitive price index (SPI) monetary assets (M2), import, export, credit to private sector, budgetary
expenditure and budgetary deficit.

The State Bank of Pakistan, in its annual report on the state of economy, said that Pakistan's economy
witnessed a moderate recovery during 2007 financial year with real GDP growth reaching the 7.0 percent,
as compared to 6.6 percent growth seen in 2006 financial year.

"The Pakistan is among countries in the region, which have achieved GDP growth at the rate of seven
percent and other two countries are China and India," it said.

"This is the fourth successive year of sustained high growth in the economy, with the average annual
growth accelerated to seven percent during 2003-07 period. The continued strong performance of the
services sector made the major contribution to the 2007 financial year's outcome, while growth in
agriculture and industry also witnessed improvement over the previous year. "The investment to GDP
ratio rose to a record 23 percent in 2007 financial year from 21 percent in 2006 financial year.

"This was contributed by a surge in domestic private investment and record foreign direct investment
(FDI) flows. As a result, the economy looks well poised to continue on a high growth trajectory in
coming years. "However, despite the improvement, the investment to GDP ratio remains low in Pakistan,"
the report said.

Although the savings to GDP ratio had also increased to 18 percent during 2007 financial year compared
with 17.2 percent in the preceding year, it was still low as compared to regional and international
standards, said the report.

"To increase the savings rate, it is necessary to expand the network of banks, microfinance institutions,
and postal savings to the far-flung areas with simple procedure and friendly atmosphere for small
depositors. In addition, savings schemes for school/college students could also help inculcate savings
behaviour from an early age," annual report added.

Agriculture sector witnessed a strong growth of five percent in 2007 financial year as against the target of
4.5 percent. "The recovery in the agricultural growth during 2007 financial year is principally driven by a
remarkable growth of 7.6 percent by major crop sub-sector.

"A striking feature in 2007 financial year is that the yields obtained on almost all-important major crops
were either at or near 10-year highs. Apart from favourable weather, the improvement in yields in recent
years was probably helped by tile improved access to credit and supportive government polices (the latter
includes ensuring better seed availability, provision of subsidy on DAP fertilisers.

"The industrial sector witnessed a moderate recovery, with 6.8 percent growth during 2007 financial year
compared with five percent in 2006 financial year. "This was the second consecutive fiscal year when
growth targets for industrial sector remained unachieved. Within the industrial sector, the highest growth
was observed," the report observed.

In the construction sub-sector with value-addition rising by 17.2 percent in 2007 financial year, compared
with only 5.7 percent in 2006 financial year. The SBP report said that LSM growth remained a significant
contributor to the GDP growth during 2007 with value-addition rising by 8.8 percent, down from the 10.7
percent growth in the preceding year and as against the target of 11 percent.

36
The electricity and gas distribution sub-sector continued to record losses in 2007 financial year, with the
value-addition by this sub-group falling by 15.2 percent in 2007 on top of the decline of 23.8 percent in
the preceding year.

For yet another year, the services sector growth remained well above target; the eight percent increase in
value-addition during 2007 financial year was substantially above the 7.1 percent target. The 2007
financial year target had been set lower than the 9.6 percent growth recorded in 2006 financial year.

The sustained strong growth by the services sector for the last six successive years has contributed to a
structural shift in the economy, with services contributing over half of GDP in 2007 financial year.

The sustained high pace of growth in the economy is also reflected in a record level of investment during
2007. The total investment to GDP ratio rose to a record level of 23 percent in 2007, significantly higher
than 21.7 percent seen in the preceding year as well as the annual target of 21.5 percent, the SBP said in
the report.

"This impressive performance is a result of continued strength of domestic demand, a sharp rise in foreign
direct investment (FDI) as well as a healthy increase in the public sector development programme
(PSDP).

"Country's budgetary expenditures and deficit has also surpassed the annual target by reaching 19.2
percent and 4.3 percent of GDP respectively as compared to targets of 17.5 percent and 4.2 percent of
GDP.

"Inflationary pressures visibly declined in the domestic economy during the initial months of 2007,
pulling down the inflation numbers for the period below that in the preceding fiscal year. This reflects the
impact of weaker growth in the prices of non-food components," the SBP annual report said.

However, the targets of the CPI and SPI had not achieved as the CPI stood at 7.8 percent as against the
target of 6.5 percent, while CPI stood at 9.4 percent during 2007 financial year.
Inflationary pressures remained strong throughout 2007 financial year despite a visible slowdown in non-
food inflation. Strength of food price inflation drove the annual average CPI inflation for 2007 to 7.8
percent, resulting in price index slippage by 1.3 percent relevant to the annual target of 6.5 percent.

Food inflation remained in double digits for most of the months of 2007 financial year due to the
following reasons:
-- Rising food prices in international market.
-- Domestic supply shortages of some important minor crops.
-- Higher demand on the back of increasing income levels.

"The latter indicates a significant contribution by policies to contain excessive growth in aggregate
demand. Despite these gains, the eventual 2007 financial year inflation outcome was disappointing, given
that the average annual CPI inflation of 7.8 percent was considerably higher than the 6.5 percent target for
the year.

"A surge was observed in direct tax collections and in non-tax revenues during 2007 financial year, but
the fiscal deficit for the year rose to 4.3 percent of GDP, a little higher than the target of 4.2 percent,"
annual report said.

"As a result of a relative slowdown in the growth of the current account deficit and a record increase in
investment inflows, Pakistan's external account surplus improved substantially to 3.7 billion dollars
during 2007 financial year as compared to 1.3 billion dollars in 2006 financial year.

"The 2007 financial year moderation in the growth of current account deficit is attributable mainly to a
sharp fall in the growth of imports and strong increase in remittances," it said.

However, the impact of lower import growth (8.1 percent) in 2007 financial year on the trade deficit was
lost due to the unanticipated weakness in exports, it said.

36
Export growth fell from 14.3 percent in 2006 financial year to only 3.2 percent in 2007 year. The
slowdown in textile exports was the major contributor to the decline in the overall export growth, but the
accompanying fall in exports of non-textile manufacturers and commodity producing sector made matters
worse, it said.

Nevertheless, an impressive rise in the foreign private investment continued to moderate the impact of
growing current account deficit in 2007 financial year. Specifically, financial account surplus increased
substantially from 5.8 billion dollars in 2006 financial year to a record surplus of 10.1 billion dollars
during 2007 financial year, the reports said.

This improvement in the financial account was largely contributed by equity flows rather than debt, it
said, adding benefiting from the substantial surplus in the external account, Pakistan's overall reserves
increased by 2.5 billion dollars in 2007 as compared to 524 million dollars rise in 2006.

After persistent widening during last four years, the difference between import and export growth seems
to be converging during 2007 on the back of substantial slowdown in import growth, from 38.7 percent in
2006 to 6.9 percent in 2007.

However, this welcome slowdown in import growth could not help in reducing the trade deficit due to a
concurrent slowdown in export growth from an average 15.9 percent during last four years to 3.4 percent
during 2007. As a consequent, the trade deficit reached an all time high of 13.5 billion dollars during the
period under review.

Nonetheless, the trade deficit as compared to size of economy slightly declined from record high level of
9.46 percent during 2006 to 9.31 percent during 2007, the SBP said in the annual report. "The country has
missed export target and just 3.4 percent growth witnessed in the exports as against the target of 13.1
percent, while the imports show 6.9 percent growth during last fiscal as compared to target of two percent
decline.

"On the import side, uncertainly in the global oil prices, increasing commodity prices, anticipated increase
in the import of telecom following China's investment in Pakistan's telecom sector and likely rise in
power generating machinery may put upward pressure on the import bill," the SBP report added.

Copyright Business Recorder, 2007

36
 (6) JULY-JANUARY FOREIGN INVESTMENT DOWN
BY 35 PERCENT
RECORDER REPORT

KARACHI (February 24 2008): Net foreign investment declined by over $1 billion, or 35 percent, during
seven months of the current fiscal year mainly due to high portfolio outflows due to political uncertainty.

The State Bank (SBP) on Saturday issued the statistics of foreign investment, including foreign direct
investment (FDI) and portfolio investment, which showed that overall 35 percent decline occurred in
foreign investment during July-January period of the current fiscal year as compared to same period of
last fiscal year.

Overall foreign investment (FI) stood at $2.262 billion during seven months as compared to $3.478
billion of last fiscal year, depicting a drop of $1.2157 billion. "Major reason behind this dip was 100
percent decline in portfolio inflows as the foreign investors were reluctant to invest in the equity market
due to political uncertainty and negative reports regarding the country's stock markets," economic experts
said.

They believed that after the reconstitution of new political government, foreign investors once again
would invest their money in Pakistan's stock markets. They said that during the current fiscal overall
investment would be lower than last fiscal year as during last fiscal year the country had received some
extraordinary funding by foreign investors, besides some government level investments.

SBP statistics showed that portfolio investment declined by 100 percent or $1.382 billion. After the
current decline, portfolio investment has declined to lowest level of 0.4 million dollars, previously
standing at 1.382 billion dollars in the January 2007.

FDI during July-January registered a growth of some 8 percent. However, the declining portfolio
investment decreased the overall investment by around 35 percent. FDI had gone up by 7.9 percent to
2.2624 billion dollars as compared to 2.096 billion dollars during the same period of the last fiscal year,
depicting an increased of 166.4 million dollars during July-January of current fiscal.

Including privatisation proceeds total private investment showed a decline of 19.8 percent to 2.24 billion
dollars, while excluding privatisation proceeds it has dipped by 20.8 percent to 2.108 billion dollars
during the first seven months of current fiscal year.

Economist said that issuance of GDR in the future would help to boost the foreign investment in the
country, as slow privatisation process is another reason of declined in the foreign investment.

Copyright Business Recorder, 2008

36
 (7) 44 PERCENT DECLINE IN FOREIGN INVESTMENT
RECORDER REPORT

KARACHI (March 20 2008): Political uncertainty and poor law and order situation have reduced foreign
investment by about $2 billion, or 44 percent, from $4.62 billion, during eight months of the current fiscal
year. However, during February 2008 foreign investment had gone up by 15 percent as compared to
January 2008.

The State Bank on Wednesday said that overall foreign investment (including foreign direct and portfolio
investment) decreased by $2.1047 billion to $2.612 billion during July-February of current fiscal year
2008 from $4.62 billion during the corresponding period of last fiscal year.

"Major share in this dip has been contributed by record decline in the portfolio inflows, as the foreign
investors are reluctant to invest in the equity market due to political uncertainty," an economist said.

Statistics show that foreign direct investment (FDI) registered a dip of 15 percent to $2.52 billion during
July-February against $2.97 billion during the same period of last fiscal year. Portfolio investment
declined by 94.9 percent to $84.5 million as compared to $1.656 billion during the same period of last
fiscal year.

However, analyst said that despite the political crisis $84.5 million inflow in portfolio was a positive sign.
Without privatisation proceeds total private investment showed a decline of 33.2 percent to $2.50 billion
during July-February of fiscal year 2008 as previously stood at 3.818 billion dollars.

Copyright Business Recorder, 2008

36
 (8)FOREIGN INVESTORS READY TO INVEST IN
PAKISTAN: SALMAN TASEER
RECORDER REPORT

LAHORE (January 26 2008): Federal Minister for Industries, Production and Special Initiatives,
Salman Taseer has said foreign investors are hungry for investing in banking, real estate, telecom and the
country's steel industry. Taseer's comment came on Friday at a workshop on "challenges and way forward
in the steel sector of Pakistan" organised by the Engineering Development Board.

"Pakistan's steel industry is a promising one and there is a huge gap in demand and supply, thus foreign
investors can exploit the existing potential of this sector," Taseer said. He also said the foreign investors
would be ready to invest in expanding the Pakistan Steel Mills to enhance its production capacity. "India
has an edge over Pakistan in the steel industry because of good governance while its bank in abroad direct
the flow of investment into India by guiding investors," Taseer added.

His Secretary, Shahab Khawaja, said, "Unfortunately, we have ignored the steel sector and could set up
the Pakistan Steel Mills whose production capacity has not been enhanced. Presently, China and India are
buying steel on a large scale pushing its prices high internationally. The situation will not be improved
unless we develop local resources."

Pakistan Steel Mills Chairman Muhammad Javed then told the audience that workshop would stress the
need for developing local resources so that dependence on imported raw material could be minimised. He
said iron ore and coal should be explored in the country so that raw material could be provided to the steel
industry from the local resources.

"Presently, we are buying coal from Australia and Canada and iron ore from India and China. However,
Pakistan steel will sign an agreement with the Sandac project on January 29 to buy 50,000 to 60,000
tonnes of iron ore," he said.

Javed said the purchase of 15,000 tonnes of iron ore from Chagi had also started on experimental basis,
which could be enhanced up to 150,000 tonnes. "We are getting coal from Loralai in Balochistan and
quantity is likely to cross 50,000 tonnes by the end of this June and will be increased up to 100,000
tonnes gradually. Coal is also being procured from Dera Ghazi Khan on experimental basis. The Pakistan
Steel has initiated a step toward procuring local raw material for its steel production which is a good step
in right direction," he added.

He urged the business community to engage the Geological Survey of Pakistan for conduct of a survey to
identify coal and iron ore deposits in the country. " Pakistan Steel Mills is a commercial entity and
produces to earn like any private enterprise.

Consumers take up to 95 percent of the billets production and traders and dealers 5 percent. We can not
police or inspect the use of billets provided to the consumers, however, any specific complaint of the
zonal authority will be redressed on priority basis," he said.

Engineering Development Board Chief Executive Officer Almas Hyder said earlier his board's role was
limited to the steel and auto industry but now the government was helping his board to enhance its role to
the energy and telecommunication sectors to tackle the energy crisis.

"The EDB will appoint foreign consultants for identification of iron ore and coal sites in Pakistan, the
volume of investment needed for their exploration and future prospectus," he added. About the
workshop's aims and objectives, Hyder said groups formed to discuss in detail various issues confronting
the steel sector would compile their recommendations.

Copyright Business Recorder, 2008

36
 (9) FDI-LINKED POLICIES TO BE CONTINUED: DAR
RECORDER REPORT
WASHINGTON (April 13 2008): Holding out the new government's commitment to foreign direct
investment related policies, Finance Minister Ishaq Dar has invited American entrepreneurs to avail
investment opportunities Pakistan offers in various sectors.

He was addressing the members of the US-Pakistan Business Council here at the US Chamber of
Commerce and Industries on Friday afternoon. "The newly elected government in Pakistan will continue
the FDI linked policies, which we had introduced and which the previous government continued.
Obviously, there will be continuity in these policies," he said.

At the same time, Dar added, the government would also strive to improve monetary and fiscal policies.
He informed the entrepreneurs about the new coalition government's priorities and said it had given
market economy to the country (in the 1990s), introduced foreign direct investment policies as well as
various other economic reforms.

"The business leaders said they valued these reforms very much and said a delegation (of US
entrepreneurs) will visit Pakistan in the near future," Dar later said. The finance minister was optimistic
about increased inflow of US investment into various economic sectors as the business leaders had
showed a keen interest during the interaction.

The members of Pakistani delegation, who are here for World Bank-IMF annual spring meetings, include
Governor State Bank Dr Shamshad Akhtar and Secretary Finance Dr Waqar Masood Khan. Pakistan's
Deputy Ambassador in Washington Muhammad Aslam Khan also attended the meeting.

The Pakistani delegates also took part in the G-24 Deputies Meeting at the World Bank where they
presented Pakistan's views on rising food prices. On the sidelines of the global gathering of finance
leaders, Ishaq Dar also held meetings with his counterparts from other countries.

Earlier, the finance minister had a meeting with chairman US-Pakistan Business Council, Jay Collins,
who said he had been "extremely impressed with the candor and vision" of the new top Pakistani finance
official. Collins said the US business community is "optimistic about Pakistan's future, about continuing
to invest and commit long-term to Pakistan."

"I was both pleased and reassured that the fundamental premises of the new minister in terms of kinds of
policies that will allow Pakistan's economy to grow, allow the global investment community continue to
have faith in Pakistan, will be implemented by this government so I am very supportive of what I heard."

Dar says he had useful meetings with senior US officials. "We discussed how the new government views
the economic situation in Pakistan and the future roadmap to correct macro-economic balances.T he
meeting was very useful and friendly and in the broader sense we discussed bilateral issues mainly linked
with the economic side," finance minister Ishaq Dar said Friday evening after meeting with Under
Secretary of State Reuben Jaffery.

Earlier, Dar had meetings with Deputy Secretary Treasury Robert Kimmit and Assistant Secretary of
State Daniel Sullivan. "These are routine meetings, since we are in the town, obviously when you meet,
you discuss economic ties," Dar added.

Jaffery, who is Under Secretary of Economic, Energy and Agriculture Affairs Jaffery echoed Dar's views,
calling their discussion as "very constructive". "We had a very constructive meeting, we discussed a
broad array of financial and market issues and the challenges the Minister and his countrymen face and
the US support for the government in helping to address those challenges in the months to come," the US
official said.

36
Meanwhile, responding to questions from the media representatives at the end of his hectic schedule of
engagements on Friday, Dar said the new government has already started making efforts to damage
control the economic situation in relation to various macroeconomic indicators, particularly rising
inflation that the present government has inherited. He was confident of achieving improvement in the
current fiscal year as, according to him the numbers have been shared with the media and the public.

"If we do not take the corrective actions, it would be unbearable, the fiscal deficit of 9 and 9.5 per cent
roughly, so we will have to bring it down below 7 per cent."

In answer to another question the finance minister said the new government has shared with the public the
situation of the economy it has inherited. "There is no blame game, I gave numbers of what I have
inherited on the budget overrun, they are substantiated - in fact, we are going to just place it in both the
Houses of the Parliament - they will be referred to the Finance Committees, which will provide an equal
opportunity to the previous regime team to come and defend."

He said the previous government "should have allowed to make necessary fiscal and monetary
adjustments where those were necessary" in light of circumstances prevailing both domestically and
globally. "But due to political expediency in the election year, they did not do it."

Copyright Business Recorder, April 13, 2008

36