Foriegn Direct Investment in Pakistan

1. Allama Iqbal Open University,
Islamabad
Topic:
FDI in Pakistan
Presented to: Sir Rizwan Hamid
Presented by: Mateen Altaf
Class: MBA (B&F) 5th semester
Subject: International Business & finance
(8536)
mataltaf@hotmail.com

2. Acknowledgment
First of all thanks to ALLAH, Who is most beneficent & the
most merciful, Whose blessings are abundant & favors are
unlimited.
It’s my pleasure to acknowledge the guidance and support
of my subject teacher Mr. “Rizwan Hamid” for his endless
guidance.
I would also like to acknowledge the “Masood & Masood
Corporate and Legal Consultants“.

3. Introduction
A foreign direct investment (FDI) is a controlling
ownership in a business enterprise in one country
by an entity based in another country.
 FDI occurs when an investor based in one country (the
home country) acquires an asset in another country
(The host country) with the intent to manage the asset.
 Investments can take Place for many reasons,
including taking advantage of:
 Cheaper wages,
 Special investment privileges (e.g. Tax
exemptions) offered by the country

4.  Inward Foreign Direct Investment:
Foreign direct investment by a foreign firm establishing a facility with
in the domestic country, Contrasts with outward FDI.
EXAMPLE: General Motors decide to open a factory in Pakistan.
They are going to need some capital. That capital is inward FDI for
Pakistan.
 Outward Foreign Direct Investment
Foreign direct investment by a domestic firm establishing a facility
abroad, Contrasts with inward FDI.
EXAMPLE: General Motors decide to open a factory in Pakistan.
They are going to need some capital. That capital is outward FDI for
USA.
Types of FDI

5. 5 Key Reasons to Invest In Pakistan
 Geo-strategic Location
 Trained Workforce
 Economic Outlook
 Investment Policies
 Financial Markets

6. How can a foreign investor invest his funds?
The foreign direct investor may invest in by any of the
following methods in Pakistan:
 by incorporating a wholly owned subsidiary or
company, by acquiring shares in an associated
enterprise
 through a merger or an acquisition of an
unrelated enterprise
 participating in an equity joint venture with
another investor or enterprise

7. Foreign Investment Inflows in Pakistan
($ Million)
Year Green Field
Investment
Privatization
Proceeds
Total
FDI
2005-06 1981.00 1540.00 3521.00
2006-07 4873.20 266.40 5139.60
2007-08 5276.60 133.20 5409.80
2008-09 3719.90 0.00 3719.90
2009-10 2150.80 0.00 2150.80
2010-11 (Jul-
Jan)
974.00 0.00 1181.80

8. Main Greenfield Projects, Inward Investing
In Pakistan
Investing
company
Home economy Industry Investment
Value (US $)
China Mobile China Communication 500
Total France Petroleum 406
Yamaha Japan Transport
equipment
150
Metro Germany Trade 55
Coca-Cola U.S Beverages 100
Procter & Gamble U.S Chemicals 100
Toyota Motor Japan Transport
equipment
180

9. Foreign Direct Investment, Net Outflows
 Netsol’s (a Pakistani software company) operating in
USA.
 Pakistanis have invested 6.7BDirham's in Dubai real
estate.
 Most banks invest in many countries such as HBL.

10. Investment Policy of Government of Pakistan
For the purposes of foreign investment in Pakistan, the Investment
Policy of Pakistan has formed two broad groupings:
 Manufacturing Sector
 Company incorporated under the Companies Ordinance, 1984.
 100% repatriation of capital and profits.
 Amount of foreign equity investment must not be less than US
$ 0.3 million.
 Non-manufacturing/ service sector
 Company incorporated under the Companies Ordinance, 1984.
 Amount of foreign equity investment must not be less than US
$ 0.15 million.
 100% repatriation of capital and profits (dividend).

11. Practical Study
MASOOD & MASOOD
(Corporate and Legal
Consultants) is a Pakistan
based Law firm providing Legal,
Corporate and technical business
solutions through lawyers,
advocates, corporate
consultants while performing all
the functions of a traditional law
firm in Pakistan.
Masood & Masood was established in 2005 and The Offices are
Located in major cities of Pakistan (Lahore, Islamabad and
Karachi)

12. Masood & Masood managed to assist many multinationals and foreign
individuals to invest in Pakistan and form a place of business to that
effect. Masood and Masood is currently dealing with various foreign
direct investment projects in Pakistan including:
 Real estate projects
 Oil and gas related projects
 Construction projects
 IT related projects
 Various manufacturing projects
 Service related projects
 Development projects
 Power projects

13. SWOT Analysis
Strength:
 Increase infrastructure and transfer of technology.
Opportunities:
 After the successful auction of 3G and 4G licenses
foreign investor are looking forward to invest in
Pakistan.

14. Threats:
 Political Instability is the threats to FDI.

15. Conclusion
Foreign direct investment (FDI) plays a positive role in the
process of economic growth. Pakistan has taken effective
policies and aggressively pushing economic reforms to
attract foreign investments including FDI.