Investment confidence: Still waiting for commitment

According to Business Recorder, net foreign direct investment climbed to $315.9 million in August, lifting inflows for the first two months of FY27 to $494.5 million, up 24.1 percent year-on-year. The gain looks welcome at first sight, yet it follows a weak FY26 when FDI managed only around $1.6-1.7 billion. The paper argues that two stronger months are not enough to point to a lasting investment cycle.

Inflows were concentrated in financial business and power, while trade and electronics improved and money flowed out of mining, communications and oil and gas exploration. Profit and dividend payments abroad totalled $557.6 million over the two months, a decline of 13.4 percent, as currency curbs imposed during the FY23 crisis have been relaxed. Even so, easier repatriation alone does not bring in new capital, since outgoing profits in FY26 were larger than new FDI inflows.

The article ties the hesitation to slow tax refunds, unclear regulation, costlier compliance and higher running expenses, which lock up working capital at formal firms. It also separates sovereign gains, such as better credit ratings and a return to international bond markets, from any revival in private investment. The overall reading is that investors are hedging their bets rather than committing to large, long-term projects.