BUSINESS RESEARCH

(MK-565)

ASSIGNEMT#1

Submitted To:
Mr. Khalil Arbi

Submitted By:
Muhammad Haris Salam
091248-003

MASTERS IN
HUMAN RESOURCE MANAGEMENT
 Sector Wise FDI Inflows ($ Million)

2000- 2001- Jul-Feb

Sector 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
01 02 10
Oil & Gas  80.7 268.2 186.8 202.4 193.8 312.7 545.1 634.8 775.0 398.7
Financial
(34.9) 3.6 207.4 242.1 269.4 329.2 930.3 1,864.9 707.4 86.5
Business
Textiles 4.6 18.5 26.1 35.4 39.3 47.0 59.4 30.1 36.9 15.6
Trade 13.2 34.2 39.1 35.6 52.1 118.0 172.1 175.9 166.6 48.9
Construction 12.5 12.8 17.6 32.0 42.7 89.5 157.1 89.0 93.4 72.1
Power 39.9 36.4 32.8 (14.2) 73.4 320.6 193.4 70.3 130.6 115.8
Chemical 20.3 10.6 86.1 15.3 51.0 62.9 46.1 79.3 74.3 77.2
Transport 45.2 21.4 87.4 8.8 10.6 18.4 30.2 74.2 93.2 76.4
Communicati
on
NA 12.8 24.3 221.9 517.6 1,937.7 1,898.7 1,626.8 879.1 111.3
(IT&Telecom
)

Source: Board of Investment (Government of Pakistan)

http://www.pakboi.gov.pk/
 YEAR WISE COMPARISON OF DIFFERENT SECTORS

Sector 2000-01
Oil & Gas  80.7
Transport 45.2
Power 39.9
Chemical 20.3
Trade 13.2
Construction 12.5
Textiles 4.6
Financial Business (34.9)

In the fiscal year

2000-01, Oil &
Gas sector made
its mark in
Pakistan
Economy. Total
FDI grossed 80.7
million US
Dollars in this
sector. After Oil
& Gas comes the
transport sector,
which grossed
45.2 million US
Dollars. The
Foreign Direct
Investments in
Power, Chemical, Trade, Construction and Textile sectors of Pakistan were ($ million)
39.9, 20.3, 13.2, 12.5 and 4.6 respectively. The Financial Business Sector of Pakistan
(specifically banking) faced the least and negative FDI.
 Sector 2001-02
Oil & Gas  268.2
Power 36.4
Trade 34.2
Transport 21.4
Textiles 18.5
Construction 12.8
Communication
12.8
(IT&Telecom)
Chemical 10.6
Financial Business 3.6

In the fiscal year

2001-02, Oil &
Gas sector once
again left its
footprints as
leaders in FDI in
Pakistan
Economy. Total
FDI grossed
268.2 million US
Dollars. After
Oil & Gas comes
the power sector,
which grossed
36.4 million US
Dollars. The
Foreign Direct
Investments in Trade, Transport, Textiles, Construction, Communication (IT & Telecom)
and Chemical sectors of Pakistan were ($ million) 34.2, 21.4, 18.5, 12.8, 12.8 and 10.6
respectively. The Financial Business Sector of Pakistan once again faced the least FDI,
but it was much better as compared to the previous year.
 Sector 2002-03
Financial Business 207.4
Oil & Gas  186.8
Transport 87.4
Chemical 86.1
Trade 39.1
Power 32.8
Textiles 26.1
Communication
24.3
(IT&Telecom)
Construction 17.6

In the fiscal year

2002-03, there
was an incredible
increase in the
FDI in Financial
Business sector
of Pakistan. Total
FDI grossed
207.4 million US
Dollars in this
sector. The Oil &
Gas sector goes
down to second
with a Foreign
Direct Investment
of 186.8 million
US Dollars. The
Foreign Direct Investments in Transport, Chemical, Trade, Power, Textiles and
Communication sectors of Pakistan were ($ million) 87.4, 86.1, 39.1, 32.8, 26.1 and 24.3
respectively. The Construction Sector of Pakistan faced the least FDI of 17.6 million US
Dollars.
 Sector 2003-04
Financial Business 242.1
Communication 221.9
Oil & Gas  202.4
Trade 35.6
Textiles 35.4
Construction 32.0
Chemical 15.3
Transport 8.8
Power (14.2)

In the fiscal year

2003-04,
Financial
Business had the
highest FDI
grossing 242.1
million US
Dollars. The
Foreign Direct
Investments in
Communication,
Oil & Gas,
Trade, Textiles,
Construction,
Chemical and
Transport sectors
of Pakistan were ($ million) 221.9, 202.4, 35.6, 35.4, 32.0, 15.3 and 8.8 respectively. The
Power Sector of Pakistan faced the least and negative FDI equaling (14.2) million US
Dollars.
 Sector 2004-05
Communication 517.6
Financial Business 269.4
Oil & Gas  193.8
Power 73.4
Trade 52.1
Chemical 51.0
Construction 42.7
Textiles 39.3
Transport 10.6

In the fiscal year

2004-05,
Communication
had the highest
FDI grossing
517.6 million US
Dollars. The
Foreign Direct
Investments in
Financial
Business, Oil &
Gas, Power,
Trade, Chemical,
Construction,
Textiles and
Transport sectors
of Pakistan were
($ million) 269.4, 193.8, 73.4, 52.1, 51.0, 42.7, 39.3 and 10.6 respectively.
 Sector 2005-06
Communication 1,937.7
Financial Business 329.2
Power 320.6
Oil & Gas  312.7
Trade 118.0
Construction 89.5
Chemical 62.9
Textiles 47.0
Transport 18.4

In the fiscal year

2005-06,
Communication
had the highest
FDI grossing
1937.3 million
US Dollars. The
Foreign Direct
Investments in
Financial
Business, Power,
Oil & Gas, Trade,
Construction,
Chemical,
Textiles and
Transport sectors
of Pakistan were ($ million) 329.2, 320.6, 312.7, 118.0, 89.5, 62.9, 47.0 and 18.4
respectively.
 Sector 2006-07
Communication 1,898.7
Financial Business 930.3
Oil & Gas  545.1
Power 193.4
Trade 172.1
Construction 157.1
Textiles 59.4
Chemical 46.1
Transport 30.2

In the fiscal year

2006-07,
Communication
had the highest
FDI grossing
1898.7 million
US Dollars. The
Foreign Direct
Investments in
Financial
Business, Oil &
Gas, Power,
Trade,
Construction,
Textiles,
Chemical and
Transport sectors of Pakistan were ($ million) 930.3, 545.1, 193.4, 172.1, 157.1, 59.4,
46.1 and 30.2 respectively.
 Sector 2007-08
Financial Business 1,864.9
Communication 1,626.8
Oil & Gas  634.8
Trade 175.9
Construction 89.0
Chemical 79.3
Transport 74.2
Power 70.3
Textiles 30.1

In the fiscal year

2007-08,
Financial
Business had the
highest FDI
grossing 1864.9
million US
Dollars. The
Foreign Direct
Investments in
Communication,
Oil & Gas,
Trade,
Construction,
Chemical,
Transport, Power
and Textiles sectors of Pakistan were ($ million) 1,626.8, 634.8, 175.9, 89.0, 79.3, 74.2,
70.3 and 30.1 respectively.
 Sector 2008-09
Communication 879.1
Oil & Gas  775.0
Financial Business 707.4
Trade 166.6
Power 130.6
Construction 93.4
Transport 93.2
Chemical 74.3
Textiles 36.9

In the fiscal year

2008-09,
Communication
had the highest
FDI grossing
879.1 million US
Dollars. The
Foreign Direct
Investments in
Oil & Gas,
Financial
Business, Trade,
Power,
Construction,
Transport,
Chemical and
Textiles sectors
of Pakistan were ($ million) 775.0, 707.4, 166.6, 130.6, 93.4, 93.2, 74.3 and 36.9
respectively.
 Sector Jul-Feb 10
Oil & Gas  398.7
Power 115.8
Communication 111.3
Financial Business 86.5
Chemical 77.2
Transport 76.4
Construction 72.1
Trade 48.9
Textiles 15.6

During July 2009-

Feb 2010 Oil &
Gas had the
highest FDI
grossing 398.7
million US
Dollars. The
Foreign Direct
Investments in
Power,
Communication,
Financial
Business,
Chemical,
Transport,
Construction,
Trade and Textiles sectors of Pakistan were ($ million) 115.8, 111.3, 86.5, 77.2, 76.4,
72.1, 48.9 and 15.6 respectively.
 GRAPHICAL TREND OF FDI AND
GROWTH-RATE ANALYSIS OF EACH SECTOR

OIL & GAS 

2000- 2001- Jul-Feb

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
01 02 10
80.7 268.2 186.8 202.4 193.8 312.7 545.1 634.8 775.0 398.7

The formula for computing Annual Growth Rate is

Where Yt is the observation for year t.
Using this formula, we come to know that the growth rate of FDI for 2001-02 was 2.32,
for 2002-03 was -0.3, for 2003-04 was 0.08, for 2004-05 was -0.04, for 2005-06 was
0.61, for 2006-07 was 0.74, for 2007-08 was 0.16, for 2008-09 was 0.22 & for the period
of Jul-Feb 10 it was -0.49.

The mean growth rate of this sector over the period of these years can be computed by
using Geometric Mean:

M.G.R = {2.32*(-0.3)*0.08*(-0.04)*0.61*0.74*0.16*0.22*(-0.49)}1/9
= 0.296

Where M.G.R is Mean Growth Rate

FINANCIAL BUSINESS

2000- 2001- Jul-Feb

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
01 02 10
(34.9) 3.6 207.4 242.1 269.4 329.2 930.3 1,864.9 707.4 86.5

The formula for computing Annual Growth Rate is

Where Yt is the observation for year t.
Using this formula, we come to know that the growth rate of FDI for 2001-02 was 1.1,
for 2002-03 was 56.61, for 2003-04 was 0.17, for 2004-05 was 0.11, for 2005-06 was
0.22, for 2006-07 was 1.83, for 2007-08 was 1.004, for 2008-09 was -0.621 & for the
period of Jul-Feb 10 it was -0.88.

The mean growth rate of this sector over the period of these years can be computed by
using Geometric Mean:

M.G.R = {1.1*56.61*0.17*0.11*0.22*1.83*1.004*(-0.621)*(-0.88)}1/9
= 0.86

Where M.G.R is Mean Growth Rate

TEXTILES

2000- 2001- Jul-Feb

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
01 02 10
4.6 18.5 26.1 35.4 39.3 47.0 59.4 30.1 36.9 15.6

The formula for computing Annual Growth Rate is

Where Yt is the observation for year t.
Using this formula, we come to know that the growth rate of FDI for 2001-02 was 3.02,
for 2002-03 was 0.411, for 2003-04 was 0.36, for 2004-05 was 0.11, for 2005-06 was
0.196, for 2006-07 was 0.26, for 2007-08 was -0.49, for 2008-09 was 0.23 & for the
period of Jul-Feb 10 it was -0.58.

The mean growth rate of this sector over the period of these years can be computed by
using Geometric Mean:

M.G.R = {3.02*0.411*0.36*0.11*0.196*0.26*(-0.49)*0.23*(-0.58)}1/9
= 0.38

Where M.G.R is Mean Growth Rate

TRADE

2000- 2001- Jul-Feb

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
01 02 10
13.2 34.2 39.1 35.6 52.1 118.0 172.1 175.9 166.6 48.9

The formula for computing Annual Growth Rate is

Where Yt is the observation for year t.
Using this formula, we come to know that the growth rate of FDI for 2001-02 was 1.59,
for 2002-03 was 0.14, for 2003-04 was -0.09, for 2004-05 was 0.46, for 2005-06 was
1.26, for 2006-07 was 0.46, for 2007-08 was 0.022, for 2008-09 was -0.053 & for the
period of Jul-Feb 10 it was -0.71.

The mean growth rate of this sector over the period of these years can be computed by
using Geometric Mean:

M.G.R = {1.59*0.14*(-0.09)*0.46*1.26*0.46*0.022*(-0.053)*(-0.71)}1/9
= 0.25

Where M.G.R is Mean Growth Rate

CONSTRUCTION

2000- 2001- Jul-Feb

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
01 02 10
12.5 12.8 17.6 32.0 42.7 89.5 157.1 89.0 93.4 72.1

The formula for computing Annual Growth Rate is

Where Yt is the observation for year t.
Using this formula, we come to know that the growth rate of FDI for 2001-02 was 0.024,
for 2002-03 was 0.375, for 2003-04 was 0.82, for 2004-05 was 0.33, for 2005-06 was
1.096, for 2006-07 was 0.76, for 2007-08 was -0.43, for 2008-09 was 0.049 & for the
period of Jul-Feb 10 it was -0.23.

The mean growth rate of this sector over the period of these years can be computed by
using Geometric Mean:

M.G.R = {0.024*0.375*0.82*0.33*1.096*0.76*(-0.43)*0.049*(-0.23)}1/9
= 0.278

Where M.G.R is Mean Growth Rate

POWER

2000- 2001- Jul-Feb

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
01 02 10
39.9 36.4 32.8 (14.2) 73.4 320.6 193.4 70.3 130.6 115.8

The formula for computing Annual Growth Rate is

Where Yt is the observation for year t.
Using this formula, we come to know that the growth rate of FDI for 2001-02 was -0.088,
for 2002-03 was -0.099, for 2003-04 was -1.43, for 2004-05 was 6.17, for 2005-06 was
3.37, for 2006-07 was -0.397, for 2007-08 was -0.64, for 2008-09 was 0.86 & for the
period of Jul-Feb 10 it was -0.11.

The mean growth rate of this sector over the period of these years can be computed by
using Geometric Mean:

M.G.R = {(-0.088)*(-0.099)*(-1.43)*6.17*3.37*(-0.397)*(-0.64)*0.86*(-0.11)}1/9
= 0.569

Where M.G.R is Mean Growth Rate

CHEMICAL

2000- 2001- Jul-Feb

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
01 02 10
20.3 10.6 86.1 15.3 51.0 62.9 46.1 79.3 74.3 77.2

The formula for computing Annual Growth Rate is

Where Yt is the observation for year t.
Using this formula, we come to know that the growth rate of FDI for 2001-02 was -0.48,
for 2002-03 was 7.12, for 2003-04 was -0.82, for 2004-05 was 2.33, for 2005-06 was
0.23, for 2006-07 was -0.27, for 2007-08 was 0.72, for 2008-09 was -0.06 & for the
period of Jul-Feb 10 it was 0.039.

The mean growth rate of this sector over the period of these years can be computed by
using Geometric Mean:

M.G.R = {(-0.48)*7.12*(-0.82)*2.33*0.23*(-0.27)*0.72*(-0.06)*0.039}1/9
= 0.44

Where M.G.R is Mean Growth Rate

TRANSPORT

2000- 2001- Jul-Feb

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
01 02 10
45.2 21.4 87.4 8.8 10.6 18.4 30.2 74.2 93.2 76.4

The formula for computing Annual Growth Rate is

Where Yt is the observation for year t.
Using this formula, we come to know that the growth rate of FDI for 2001-02 was -0.53,
for 2002-03 was 3.08, for 2003-04 was -0.899, for 2004-05 was 0.2, for 2005-06 was
0.74, for 2006-07 was 0.64, for 2007-08 was 1.46, for 2008-09 was 0.26 & for the period
of Jul-Feb 10 it was -0.18.

The mean growth rate of this sector over the period of these years can be computed by
using Geometric Mean:

M.G.R = {(-0.53)*3.08*(-0.899)*0.2*0.74*0.64*1.46*0.26*(-0.18)}1/9
= 0.596

Where M.G.R is Mean Growth Rate

COMMUNICATION (IT&TELECOM)

2001- Jul-Feb
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
02 10
12.8 24.3 221.9 517.6 1,937.7 1,898.7 1,626.8 879.1 111.3

The formula for computing Annual Growth Rate is

Where Yt is the observation for year t.
Using this formula, we come to know that the growth rate of FDI for 2002-03 was 0.898,
for 2003-04 was 8.13, for 2004-05 was 1.33, for 2005-06 was 2.74, for 2006-07 was
-0.02, for 2007-08 was -0.14, for 2008-09 was -0.46 & for the period of Jul-Feb 10 it was
-0.87.

The mean growth rate of this sector over the period of these years can be computed by
using Geometric Mean:

M.G.R = {0.898*8.13*1.33*2.74*(-0.02)*(-0.14)*(-0.46)*(-0.87)}1/8
= 0.64

Where M.G.R is Mean Growth Rate

Analysis:

We saw that the Oil & Gas sector of Pakistan had its maximum FDI inflow during 2008-
09. It notably increased during 2001-02 as compared to previous year and remained
almost steady till 2005-06. Then the FDI started to increase in the next two years. And for
the period of Jul-Feb 2010, it drastically decreased from $775 million to $ 398.7 million.

The Financial Business sector of Pakistan appeared to improve by mid of 2002. then, for
almost four years i.e., 2002-06, this sector’s FDI remained steady. Then suddenly its FDI
increased by leaps and bounds in the next two years, followed by a similar decrease in
FDI in coming two years.

The Textile sector of Pakistan faced a zigzag mannered FDI in the last ten years. It
increased to $59.4 million till 2006-07 at a relatively steady rate, then decreased
drastically to $30.1 million in the coming year. In the next year (2008-09) it increased to
$39.9 million & then for the period of Jul-Feb 2010 it was $15.6 million.

In Trade sector, we observed a steady inflow of FDI till 2004-05, followed by an increase
to $172.1 million in two years. Then it remained steady for almost two years and
drastically decreased to $48.9 million during Jul-Feb 2010.

The FDI inflow for Construction sector of Pakistan increased at a slower rate till 2004-
05. Then moved to its maximum of $157.1 million over a period of two years (till 2006-
07). Then fell again to $89 million, remained steady for another year and fell again.

Pakistan’s economy faced an interesting fact when its Power sector’s FDI continued to
fall for almost 4 years and went to negatives during 2003-04. Then suddenly shoot up to
$320.6 million in next 2 years. In the coming 2 years, it fell to $70.3 million, but then got
its inflows stable.

The sector which faced most unsteady inflows of FDI in Pakistan is Chemical sector. It
fell from $20.3 million to $10.6 million during 2001-02, then shoot-up to $86.1 million in
coming year and dropped in the very next year to $15.3 million. Afterwards, the FDI rose
for almost 2 years, then dropped and then rose again. Now its facing some steady inflows
for the last three years.

The Transport sector’s FDI graph makes a U-shape between 2003-09, which shows that it
fell at a very faster rate but took a long time to make a come back. The inflows dropped
from $87.4 million to $8.8 million in 2003-04, but then took about five years to get back
again (2008-09)

The FDI in Communication sector faced a steady inflow for 2 years (till 2002-03). Then
lifted up to $517.6 million in next 2 years. Afterwards, it shoots up to $1,937.7 million in
next year (during 2005-06). It remained almost steady for coming 2 years & then
drastically fell down.