EMERGING ECONOMIES
CHALLENGES AND FUTURE WITH
REFERENCE TO PAKISTAN
Syed Ahmad
GM Operations Foundation Securities (Pvt) Ltd
And
Visiting Faculty at IOBM and SZABIST
Importance of FDI
Investors Perspective.
The decision to invest in a foreign country is based on
cost and benefit analysis. If perceived benefits outweigh
perceived costs, foreign investment will be made. As a
principle, foreign investment is made in those countries
where risks are low and returns are high. However,
speaking in specific terms, there are many factors in the
host country which restrict or promote foreign
investment. These factors can be categorized into:
political;
economic and ;
regulatory.
Importance of FDI
Contd
October 1997, Indonesian Rupiah fell by 30% and sought IMF help.
October 1997, Hong Kong's stock index falls 10.4% after it raises
bank lending rates to 300% to fend off attacks on the Hong Kong
dollar. The plunge on the Hong Kong Stock Exchange wipes $29.3
billion off the value of stock shares.
Oct. 27, 1997
Rattled by Asia's currency crisis, the Dow Jones Industrial Average
plummets 554 points for its biggest point loss ever. Trading on US
stock markets is suspended.
Nov. 3, 1997
Sanyo Securities Co. Ltd., one of Japan's top 10 brokerage firms,
gone bankrupt with liabilities of more than $3 billion.
December 1997, The Thai government announced that it will close
56 insolvent finance companies as part of the IMF's economic
restructuring plan. 30,000 white-collar workers lost their jobs
Contd ..
5,000
4,000
3,000
2,000
1,000
2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13
Total FDI
14%
5%
13%
1%
32%
0%
0%
2%
1%
8%
12%
USA
Switzerland
China
UK
Saudi Arabia
Others
U.A.E
Germany
Japan
Korea (South)
Hong Kong
Norway
38%
17%
0%
1%
2% 0%2%
14%
2%
Oil & Gas
Construction
Financial Business
Power
Textiles
Chemical
Trade
Transport
1.
2.
3.
2.
3.
4.
5.
Challenges
Challenges Contd..
The bad law and order situation created mainly by the wave of
terrorism coupled with resurgence of ethnic violence in Karachi,
the country`s business capital, that more than any other factor
has increased the risk of doing business in Pakistan as well as
impaired the national image.
Policies
Terroism
Others