KARACHI: Government’s efforts to revive economy have been acknowledging by world economists as in a Baseline Profitability Index (BPI) report, Pakistan has ranked at 97th as compared to last year’s 106th in a list of Foreign Direct Investment (FDI) friendly countries.
Pakistan has jumped by 9 points up due to notable improvement in BPI value to 0.90 while it was 0.87 in BPI 2013. According to Daniel Altman who is an economist and internationally best selling author said Pakistan was considered 97th best country where foreigners could invest in 2014 amongst total 112 countries across the world.
Pakistan’s asset growth rank 2014 stood at 111 while preservation of value rank 2014 stood at 71 and repatriation of capital rank 2014 is 11 as compared to 18 in last year’s BPI.
He managed BPI, which was a tool for assessing the attractiveness of investing in markets around the world that was published by Foreign Policy magazine of United States of America.
Altman guides where to invest around the world in 2014.Though, he did not categorically describe the reasons of improvement in Pakistan’s rank, but he suggested BPI brought together eight factors to predict the total pretax return investors might expect in countries around the world, economic growth, financial stability, physical security, corruption and expropriation by government, exploitation by local partners, capital controls and exchange rates.
According to industry experts, seriousness of government towards regaining economic prosperity is gradually gaining the foreign investors’ confidence, which could be judged by upgrading in BPI’s rank of world renowned publication.
The index considers asset growth, preservation of value and repatriation of capital. Botswana ranks the highest in 2014 with a BPI value of 1.31, Venezuela ranks the lowest at 112 with a score of 0.63. Three factors will affect the ultimate success of a foreign investment including, how much an asset’s value grows, the preservation of that value while the asset is owned, and the ease of bringing home the proceeds from selling the asset.
India maintained its sixth position in large part because of the potential for real appreciation in the rupee on back of Narendra Modi’s supposedly reform-minded government and the strong hand of Raghuram Rajan at the central bank, he added.
The index takes a dim view of Chinese property rights, perhaps because of the country’s nominally communist system. China’s expectations for growth dimmed significantly as well, pushing it still further down the rankings to 60th place in 2014.
The BPI suggests not every fast-growing country is a perfect target for foreign investment. Many other factors determine just how much of that growth will be transformed into a cash return back home. Plenty of them are not included in the BPI, but it still contains much more information than a simple economic growth forecast, Altman added.
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