• Home
• /
• Business

Pakistan establishes 27 greenfield projects

ISLAMABAD — Pakistan has managed to establish only 27 ‘greenfield projects’ from total foreign direct investment (FDI) of $4.273 billion it received in calendar year 2006. In comparison, 981 greenfield projects were established in neighbouring India from FDI of $16.881 billion during the said period.

These figures were revealed in the ‘Country Fact Sheet’ for Pakistan together with the World Investment Report 2007, released yesterday by the United Nations Conference on Trade and Development (UNCTAD).

Pakistan has been ranked at 89 in the Inward FDI Performance Index for 2006 as against 104 for 2005, while it stood 89 in the Outward FDI Performance Index as compared to its position of 91 in year 2005.

The report said global FDI soared to $1,306 billion in 2006, recording an increase of 38 per cent over previous year. South Asia received $22.274 billion in FDI in 2006, which was more than double the investment of $9.866 billion it received in 2005. The FDI inflows to Pakistan increased by less than 100 per cent from $2.201 billion in 2005 to $4.273 billion in 2006. The FDI inflows to India, on the other hand, rose by 250 per cent from $6.676 billion in 2005 to $16.881 billion in 2006. The report gave details of greenfield projects established from 2002 to 2006 in all the regions. These projects generate additional employment which is not the case in the acquisition of already established projects by foreign investors.

The number of greenfield projects established in Pakistan was 13 in 2002, 23 in 2003, 20 in 2004, 67 in 2005 and 27 in 2006. That meant the total number of greenfield projects during the last five years in Pakistan was 152.

In neighbouring India, 246 greenfield projects were set up in 2002, 453 in 2003, 696 in 2004, 590 in 2005 and 981 in 2006. Thus, India managed to develop 2,966 such projects during the five-year period from 2002 to 2006.

It is worth noting that the total number of greenfield projects established in Pakistan was much less than the projects attracted by India even in 2002 when it set up the lowest number of such projects.

Another point that needs attention is that the FDI for greenfield projects in Pakistan remained inconsistent during the last five years while India managed to attract higher number of foreign investors for these projects every year, though there was a slight decline in 2005 which was more than compensated in 2006.

There were five cross-border mergers and acquisitions in Pakistan in 2004 which increased to six in 2005 with another six Pakistani companies acquired by foreign investors in 2006. Foreigners acquired 80 Indian companies in 2004, 126 in 2005 and 163 in 2006.

Again there is a progressive increase in cross-border mergers and acquisitions by foreigners in India while the process remained stagnant in Pakistan.

Pakistani investors purchased/acquired three foreign companies in 2004 and none in 2005 and 2006. Indian investors, on the other side, acquired 64 foreign companies in 2004, 91 in 2005 and 133 in 2006, showing a consistent increase. These included some of the biggest acquisitions worth $32 billion by Mittal of a European steel company and 9 billion dollars takeover of another steel company by Tata.

The report revealed that developed economies were the main recipients of FDI inflows which increased by 45 per cent in 2006 to $857 billion. The US regained its position as the main destination for FDI inflows replacing Britain which was the leader in 2005. The FDI inflows to developing economies reached a record 379 billion dollars, registering an increase of 68 per cent over previous year. The largest investments in this category went to China, Hong Kong and Singapore.