FDI falls 45pc to $460m

Published December 16, 2016

KARACHI: Foreign direct investment (FDI) fell by 45 per cent year-on-year to $460 million in the first five months of the current fiscal year, giving a disappointing picture of the economy, the State Bank of Pakistan said on Thursday.

The inflows were mainly dominated by two countries — China and Turkey.

The government has been announcing massive changes in the economy and claimed to have set the economy on the right path, but it has failed to attract foreign investment.

It was hoped that the China-Pakistan Economic Corridor (CPEC) would help attract more FDI, but the investment is still declining. Inflows from China plummeted 58pc to $156m in July-November.

China became the biggest trading partner of Pakistan during the last three years, but Pakistan remained at the bottom of the list of countries in the region receiving FDIs.

Turkey made an investment of $126m which placed the country in the list of second-largest investor in Pakistan, but this was a one-time investment since FDI in the same period of last fiscal was $15.8m.

FDI inflows from the United Arab Emirates, United Kingdom and United States were $63m, $39m and $60m, respectively, while the rest of the investments were much less than $30m.

The biggest visible change was the foreign portfolio investment which jumped by 150pc during the five months under review. It rose to $1.141 billion from $454m during this period of the last fiscal year. The booming equity created great attraction for foreign investors, but this investment does not stay for long, which is why FDI is considered as the real investment in the economy.

The highest investment came in the power sector as it rose to $145m during this period compared to $16m a year ago. In contrast, the electronics sector attracted $125m while oil and gas exploration companies attracted $62m.

Published in Dawn, December 16th, 2016

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