Source: State Bank of Pakistan

Source: State Bank of Pakistan

The net inflow of foreign investment has declined sharply from 823 million dollars to 403 million dollars in last two-years. The current financial year showed some improvement as net FPI increased by 8.3 percent during the first ten months of the current fiscal year but FDI declined by 3.7 percent during the same period. [See Table 3.8 (a)] The East-Asian financial crisis of 1997 has already eroded investor’s confidence in the Asian region and Pakistan was no exception. Economic sanctions imposed by some developed countries after the nuclear tests as well as the complicated IPPs (Independent Power Projects) issue did not help in restoring foreign investor’s confidence. An early resolution of the IPP issue on commercial line will go a long way in restoring investor’s confidence. The portfolio investment recovered from an inflow of US $ 7.4 million during July-April 1998-99 to US $ 57.1 million in July-April 1999-2000.

As far as sectoral distribution of foreign direct investment (FDI) is concerned, the Power sector dominated as a priority sector for the last five years. But during the current fiscal year, its share has declined from 30.0 percent last year to 15.5 percent in July-April 1999-2000. The fall in the share of power sector is due to over-saturation in this sector. The chemical, pharmaceutical & fertilizer group has emerged as the single largest recipient of FDI flows’ and it has improved its share in FDI from 11.2 percent in 1998-99 to 28.3 percent in 1999-2000. The tremendous increase in FDI flows in this sector is because of commissioning of ICI’s PTA plant and FFC-Jordan Fertilizer plant near Karachi. A comparison of the sectoral share in FDI of some important groups is given in Table 3.8 (b).

MINING AND QUARRYING
Pakistan has economically exploitable reserves of baryte, dolomite, gypsum, rock salt, magnesite, soap stone, silica sand, limestone, marble, onyx marble, granite and precious-semi precious stones. The economic viability of precious metals like gold, copper tin, silver, antimony, platinum group of elements (PGE), tungsten, lead, zinc, chromite and lithium is yet to be established after detailed studies. Pakistan has enormous potential of untapped mineral resources and their meager share of 0.5 percent in GDP does not fully reflect the actual potential. Over the year, the presence of large amount of mineral reserves has been reported but very few have been evaluated or developed for want of high risk capital investment, non-availability of latest technology, inadequate geological data, lack of infrastructure in remote mineral bearing areas and geopolitical environment.

Presently, the value addition in the mineral sector is concentrated in three principal minerals like coal, natural gas and crude oil. These three minerals account for four-fifth of the weight in the total value addition in the mineral sector. Due to healthy growth in the value addition in these three minerals during the year 1999-2000, the overall growth in the mineral sector is expected to be 7.7 percent as against 3.6 percent in 1998-99.

Mineral Development in the Public Sector
There are four main organizations working under the Federal government, namely, Geological Survey of Pakistan (GSP), Pakistan Mineral Development Corporation (PMDC), Saindak Metals Ltd. (SML), and Lakhra Coal Development Company (LCDC) for mineral development. Besides, these public sector companies, there are a number of foreign companies engaged in mineral exploration work. A small number of private local companies are also involved in mineral exploration in the country but their activity is confined to small investment projects like coal extraction and gems. The provincial governments are also extending helping hand through their four corporations.
1) Punjab Mineral Development Corporation (PMDC)
2) Balochistan Development Authority (BDA)
3) Sarhad Development Authority (SDA)
4) Sindh Coal Development Authority (SCDA)

The extraction of main minerals in Pakistan is summarized in Table 3.9.

Source: Federal Bureau of Statistics

Foreign Companies in Mineral Development
A National Mineral Development Policy was announced in 1995 with aims of attracting foreign investment to fill the gap between resources and investment. Although, implementation of the Policy remains slow it has however, succeeded in attracting a number of multinational companies (MNC`s) currently engaged in examining prospects of exploration and development of precious and base metals in Pakistan. The foreign direct investment (FDI) in Mining and Quarrying sector has increased by 163 percent in 1997-98 but since then it has started declining. Its share in total FDI inflow, however, peaked at 18.4 percent in 1998-99 but during July-April 1999-2000, it has declined to 15.2 percent. Nevertheless, it is still the second largest recipient of FDI inflow after power generation sector. The FDI inflow in the mining and quarrying sector is given in the Table 3.10.

* July-April
Source: Economic Adviser Wing

The PASMINCO of Australia is carrying out exploration in Lasbela district of Balochistan for zinc and lead under a joint venture with PMDC and BDA. The PASMINCO also drilled on Duddar deposit, Mithi, Dhoro and Kanraj. It carried out regional airborne geophysical survey of the concession area and interpreting the results. The BHP Minerals of Australia is engaged in exploration of copper and gold in Chagai District of Balochistan for the last five years. The ORANMORE Resources Ltd. of Ireland is conducting exploration of lead and zinc and associated minerals in District Khuzdar, Balochistan under a joint venture of Balochistan government and Pakistan Petroleum Ltd. The MINORCO of Holland has signed a broad term MOU to conduct exploration of gold and other precious metals in Northern Areas and NWFP. All these companies have collectively invested about US $ 29 million on exploration activities in Pakistan.