Most productive projects and enterprises in a country are financed locally and
generate revenue in local currency. Domestic capital formation is the driving force behind
any country's development. At the same time, foreign investment has a critical role to
play. Attracting international capital helps to close the gap between local savings and
investment needs. In the cover story efforts are made to discuss the key issues facing the
sectors having the largest foreign investment. These include oil & gas exploration,
power generation, insurance and pharmaceutical sectors as well as capital markets and
institutions like CDC and IFC.
Foreign investors are keenly observing the forex
management policy and capital controls in Pakistan. The continuation of these policies is
linked with the forex reserves of the country, prices of commodities being imported and
exported and normalization of relationship with the multilateral lenders.
Pakistan has often come up with attractive policies but no sooner did
the policy announced amendments and different interpretations distorted them. Pakistan
opened the market much earlier than India but has received far lesser investment though
India also suffered from political instability.
