ACKNOWLEDGEMENT

2. ACKNOWLEDGEMENT We are heartily thankful to our Professor “Mr. Shahid Mehmood”, whose encouragement, guidance and support from the initial to the final level enabled us to develop an understanding of the subject (Banks And Financial Institutions) and our project.

3. FOREIGN DIRECT INVESTEMENT

4. PRESENTED TO:

5. Presented By Presented By

6. FDI DEFINITION • Foreign direct investment (FDI) is investment directly into production in a country by a company located in another country, either by buying a company in the target country or by expanding operations of an existing business in that country.

7. FDI FDI Concepts • Foreign direct investment (FDI) plays an extraordinary and growing role in global business. It can provide a firm with new markets and marketing channels, cheaper production facilities, access to new technology, products, skills and financing. For a host country or the foreign firm which receives the investment, it can provide a source of new technologies, capital, processes, products, organizational technologies and management skills, and as such can provide a strong impetus to economic development.   Foreign direct investment, in its classic definition, is defined as a company from one country making a physical investment into building a factory in another country. • In the past decade, FDI has come to play a major role in the internationalization of business. Reacting to changes in technology, growing liberalization of the national regulatory framework governing investment in enterprises • For small and medium sized companies, FDI represents an opportunity to become more actively involved in international business activities • Many governments, especially in industrialized and developed nations, pay very close attention to foreign direct investment because the investment flows into and out of their economies can and does have a significant impact

8. TYPES of FDI

9. Inflow of equipment &technology • Competitive advantages & innovation • Financial resources for expansion • Employment generation • Contribution to export growth • Access to global marketplace for domestic player

10. Crowding of local industry • Loss of control • Conflict of law • Possible expansion of resources wages • Effect on local culture • Effect on natural environment

11. Why is FDI important for any consideration of going global? • Avoiding foreign government pressure for local production. • Circumventing trade barriers, hidden and otherwise. • Making the move from domestic export sales to a locally-based national sales office • Capability to increase total production capacity. • Opportunities for co-production, joint ventures with local partners, joint marketing arrangements, licensing, etc;

12. WHO CAN BE A FOREIGN INVESTOR?

13. HOW CAN A FOREIGN INVESTOR INVEST HIS FUNDS? • 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

14. WHAT WOULD BE SOME OF THE BASIC REQUIREMENTS FOR COMPANIES CONSIDERING A FOREIGN INVESTMENT?

15. Why Invest in Pakistan

17. Five Key Reason to Invest in Pakistan

18. Five Key Reason to Invest in Pakistan Geo-strategic Location Located in the heart of Asia, Pakistan is the gateway to the energy rich Central Asian States, the financially liquid Gulf States and the economically advanced Far Eastern tigers. This strategic advantage alone makes Pakistan a marketplace teeming with possibilities. Trained Workforce A large part of the workforce is proficient in English, hardworking and intelligent. Pakistan possesses a large pool of trained and experienced engineers, bankers, lawyers and other professionals with many having substantial international experience.

19. Five Key Reason to Invest in Pakistan Economic Outlook Pakistan is one of the fastest growing economies of the world having touched a GDP growth rate of 8.4% in 2005. Today Pakistan has over 170 million consumers with an ever growing middle class. Foreign Direct investment has risen sharply from an average of $300 million in the 1990s to over $3.7 billion in 2008-09. Fiscal deficit has declined from an average 7% of GDP in the 1990s to around 3% in recent years. And FOREX reserves have increased from $3.22 billion in 2000-01 to $11.6 billion in June 2009.

20. Five Key Reason to Invest in Pakistan Investment Policies Current investment policies have been tailor made to suit investor needs. Pakistan's policy trends have been consistent, with liberalization, de-regulation, privatisation, and facilitation being its foremost cornerstones. Financial Markets The capital markets are being modernized, and reforms have resulted in development of improved infrastructure in the stock exchanges of the country. The Securities and Exchange Commission of Pakistan has improved the regulatory environment of the stock exchanges, corporate bond market and the leasing sector.

21. Foreign Investment inflows in Pakistan ($Million)

22. WHAT ARE THE FOREIGN DIRECT INVESTMENT INCENTIVES IN PAKISTAN? • Avoiding foreign government pressure for local production.  • Making the move from domestic export sales to a locally-based national sales office.  • Capability to increase total production capacity.  • Opportunities for co-production, joint ventures with local partners, joint marketing arrangements, licensing, etc;    • Low corporate tax and income tax rates in Pakistan • Tax concessions/exemptions to particular businesses • Special economic zones developed by the government of Pakistan • Cheap labour in Pakistan • JOB training & employment subsidies • Infrastructure subsidies • Research and Development support

24. Investment Policy of Govt. of Pakistan • MANUFACTURING SECTOR • The entity must be a company incorporated under the Companies Ordinance, 1984. • 100% foreign equity is permissible on the basis of repatriation of capital and profits (dividend). • The amount of foreign equity investment must not be less than US $ 0.3 million

25. Investment Policy of Govt. of Pakistan SERVICE SECTOR The entity must be a company incorporated under the Companies Ordinance, 1984. The amount of foreign equity investment must not be less than US $ 0.15 million. 100% foreign equity is permissible on the basis of repatriation of capital and profits (dividend).

26. Investment Policy of Govt. of Pakistan Investment in Infrastructure Sector in Pakistan • Foreign Direct Investment in an infrastructure sector is allowed for infrastructure projects which may include development of an Industrial Zone(s). • Foreign investors may hold 100% equity allowed on repatriation basis and the minimum amount of foreign equity investment in the project shall be 0.30 million dollars.

27. Investment Policy of Govt. of Pakistan NO GO AREAS Government of Pakistan prohibit the following areas for investment: Arms and ammunition High explosives Radioactive substances Security printing, currency and mint Alcoholic beverages or liquor

28. Successful foreign investment Companies

29. Reasons Behind Low FDI

30. Conclusion FDI is more than an external resource inflow. FDI can modernize industry and better integrate the economy into international production. FDI has become an important growth factor in the globalization of the world economy. Pakistan have taken effective policy and aggressively pushing economy reforms to attract foreign investment including FDI. FDI has not contributed much to the economy growth in Pakistan from the time period 1980-2011, as compared to domestic capital and labor, therefore it is imperative for the government to make a policy for attracting FDI to be a significant contributor to economic growth, Pakistan would be better by focusing on improving infrastructure, human resources, developing, creating a stable macroeconomic framework and conditions conductive for productive investments to speed up the process of development .

31. Recommendations and Suggestions

32. Recommendations and Suggestions

33. Aim of Research “To promote foreign direct investment to enhance Pakistan's international competitiveness and to contribute to economic and social development ”