ERUM ZAIDI KARACHI - The inflow of Foreign Direct Investment (FDI) into Pakistan during first six months (July to December) of current financial year 2010-11 is reported to have dropped by 15.5 per cent to $828.5 million from $968.9 million in the same period last year. Officially figures on Foreign Investment in Pakistan by the SBP here on Friday, showed net foreign investment in the country fell 15.4 per cent to $1.05 billion in the first half of FY11, compared with $1.241 billion during the corresponding half of the previous fiscal year. Showing a negative 18.6 per cent YoY growth, the inflow of portfolio investment at the local equity market stood at $221.5 million as against of $272.1 million of last financial year. According to the latest break-up, the total foreign private investment inflow with privatisation and without privtisation proceeds declined to $1.06 billion from $1.279 billion, depicting 17.1 per cent negative growth over the same period last year. The total foreign investment received from developed countries slashed 39.5 per cent as stood at $560.3 million during Jul-Dec FY11 as against of 926.3 million in the equivalent months of FY10. However, FDI from developed region dropped to $340.6 million from $629.1 million, showing a higher negative growth of 45.9 per cent where as port folio investment from said region amounted to $219.7 million or 26.1 per cent growth during the period under review from $297.2 million in the first half of the past fiscal year. Out of 36 various economic groups, financial business, communication, sugar, textiles, cement, and oil and gas explorations and basic metals sectors witnessed higher growth in FDI. According to the economic experts, the YoY decline in the FDI growth is caused by the decline in both, equity capital and reinvested earnings. On the domestic front, poor security situation, energy crisis, weak macroeconomic fundamentals and circular debt issue proved to be main hurdles for investment flows. These factors increased the cost of doing business as well. Therefore, these domestic factors coupled with external factors further weakened the foreign direct investment flows. Given a sharp slowdown in foreign inflows, an economist assumes the value of the Pak rupee will decline to 89.80 by December 2011. The major creditors, including the IMF, World Bank and Asian Development Bank, have all suspended disbursements due to the deteriorating fiscal position. FDI inflows and portfolio investment in the equity and securities markets have also dropped, discouraged by the weak economy and the deteriorating security and political environment, said Sayem Ali, Economist at Standard Chartered Bank Limited. He further said the Pak rupee witnessed relative stability in 2010, depreciating 1.8 per cent YoY against US dollar (USD), to close the year around the 85.8 level from 84.5 at end-2009. This is a marked improvement from the 28 per cent depreciation witnessed in 2008 and 8 per cent depreciation in 2009. The Pak rupee has been helped in large part by record-high remittances, strong export growth primarily due to rising cotton prices and weak import demand. The current account deficit declined to USD 504 million (0.3pc of GDP) during the period July to November 2010, down 72 per cent YoY, he added.