KARACHI - Pakistan’s endeavours to create a soft and investors-friendly image abroad seem to have been less effective as the profit-conscious foreign investors continue to remain risk-averse towards the politico-strategically-embattled country. According to central bank, the first 11 months of the outgoing fiscal year, July-May FY12, saw the flow of foreign investment into Pakistan shrinking by an alarming 62.5 percent. In monetary terms this amounts to over $ 1.1131 billion. During the review period the international investors invested only $ 678.9 million in the troubled country compared to $ 1. 810 billion they had invested in the corresponding months of FY11. Foreign Portfolio Investment (FPI) at the country’s bourses appeared to be the worst hit and dropped by 109.5 percent or $ 402.8 million to stand at $ 35 million against 367.9 million of last fiscal year. According to market observers, the ongoing impasse in the Pak-US stratego-diplomatic relations happens to be a major reason for declining portfolio investment in Pakistan. Washington, being the largest provider of civil and military aid to Islamabad, plays a key role in deciding Pakistan’s economic health, a major concern of the local and private investors intending to invest in the country. Also, the current politico-judicial hustle and bustle in Pakistan is playing havoc with the investors’ sentiments, especially at the bourses. “Hopes for improvement in Pak-US ties affected the investor sentiments despite concerns for present judicial crises in the country,” viewed Ashen Mehanti, a senior analyst at Arif Habib Securities. The analyst said on Friday the equity investors’ mixed views on future the country’s economic and political outlook kept their activity limited at the Karachi Stock Exchange. No exception is the Foreign Direct Investment (FDI) that contracted to $ 756.4 million from July-May FY11’s $ 1.463 billion, registering a sharp decrease of $ 707.5 million or 48.3 percent. Since 2008 the FDI under the head of privatization proceeds has been zero as the government has by and large been failed to find a local or international buyer for its loss-making Public Sector Enterprises (PSEs). The overall foreign private and public investment declined, respectively, by 60.6 percent to $ 721.4 million and 101 percent to negative $ 42.5 million from FY11’s $ 1.831 billion and negative $ 21.1 million. The foreign public investment against the debt securities, showing the net sale/purchase of special US$ bonds, Eurobonds, FEBC, DBC, treasury bills and Pakistan Investment Bonds, was however an exception by marking a negative growth of 101 percent to $ 42.5 million. The economic observers dubbed the ongoing downward trend in foreign investment as critical for the resource-constrained Pakistan. They say increased dollar inflows were the only permanent factor that could rid the debt-laden country of its Balance of Payment woes. Exacerbated by the ongoing diplomatic cold war between the Washington and Islamabad, investment climate in the terror-stricken Pakistan has been un-conducive, thanks to a deteriorating law and order and ever-present political instability.