* Pakistan FDI likely to rise in 2nd half
* Militancy remains strong deterrent for investors
* Pakistan has always been talking to Indian investors
By Carolyn Cohn and Isabel Coles
LONDON, Feb 10 Foreign direct investment in
Pakistan could return to a positive trend this year, but
militancy is a deterrent to investors, the country's investment
minister said on Thursday.
Floods last year caused nearly $10 billion in damages to
Pakistan, and the country's costly war against Islamist
insurgents has also weighed on its efforts to attract foreign
Foreign direct investment fell 15 percent in the first six
months of fiscal year 2010/11, to $830 million.
But Saleem Mandviwalla said the end of the global recession
would help growth and investment into Pakistan.
"I feel (FDI is) a very cosmetic fall. I can see the graph
now moving towards the positive side," he told Reuters in an
Mandviwalla was in Britain to meet investors. Britain is
Pakistan's second largest trading partner and Mandviwalla
earlier told an investor conference that he would like to see
Britain double its trade with Pakistan in the next five to 10
But he added many investors were scared to go into Pakistan
due to militancy levels.
"Our problem is basically terrorism. It's a very uphill task
for me to talk about investment in this environment,"
"It brings us down, we sometimes wonder how we will reach
our goals that we set out every day to reach," he told the
A 12-year old boy wearing school uniform blew himself up at
a Pakistani army recruitment centre on Thursday, killing 31
cadets, officials said. [ID:nSGE71901R]
The government has revised its 2010/11 GDP growth forecast
following the floods, to 2.5 percent for the fiscal year ending
June 30, compared with an earlier forecast of 4.5 percent.
Growth was 4.1 percent in 2009/10.
Record high food prices were a threat to inflation levels in
Pakistan, Mandviwalla said, with annual inflation already
running above 15 percent.
"This is a very, very difficult situation for us. Food
inflation is the main problem that we are faced with."
The resumption of peace negotiations with India was a
positive step, Mandviwalla said, adding:
"We have been actually talking to India and I have been
receiving Indian investors all the time ... we are very keen to
bring Indian investment and investors to Pakistan."
India and Pakistan said on Thursday they would resume formal
peace talks, the first since New Delhi broke off peace
negotiations after militant attacks on Mumbai in 2008.
Pakistan's stock market .KSE, a constituent of the
closely-tracked MSCI frontiers index, rose nearly 30 percent
last year, despite the floods and militancy.
(Editing by Catherine Evans)