Foreign investment drops by 30pc in first half of FY21
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KARACHI: Foreign direct investment (FDI) fell by 30 per cent in the first half of the current fiscal year, reflecting the impact of Covid-19 that is still affecting the country as well as global economies.
The State Bank’s latest data issued on Monday showed the country received $952 million foreign investment during July-December FY21 compared to $1.357 billion in the same period of last fiscal year.
In FY20, Pakistan managed to improve its track record as it received $2.561bn FDI compared to $1.362bn in the preceding year. However, the pandemic drastically impacted global economies suppressing any chance for Pakistan to attract huge amounts of foreign investment.
The impact of heavy outflow from portfolio also played a key role in making the balance sheet poorer in the first half of FY21. The data shows that the outflow during July-December was $244m compared to a net inflow of $18.8m in the same period last year.
Inflows from China also shrink in July-December
The breakup further shows that China made 38pc contribution to the overall $952m FDI the country received in July-December period of FY21. However, the FDI inflows from China also contracted to $359m in the period under review compared to $396m in the same period of last fiscal year.
Beijing has been the major investor in Pakistan for the past few years.
The negative side of FDI trend was the shrinking contribution of other countries.
The other significant contributions were from the United States and UK at $65m and $63m, respectively, both improved from $44m and $58m in the same period of last fiscal year.
The United Arab Emirates (UAE), which was once the biggest trade partner of Pakistan, has started disinvesting like it did in six months of FY20 when the total outflow was $27m. However, in July-December FY21, the inflow was $16.3m.
The inflows from Hong Kong, Malta and the Netherlands were $86m, $56m and $72m respectively.
The country received the highest foreign investment of $261m in electricity, gas, steam and air conditioning supply sectors. While an inflow of $137m was noted in financial and insurance sectors.
Published in Dawn, January 19th, 2021
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Comments (74) Closed
Jan 19, 2021 08:45am
But IK was making statements that economy and exports were booming?
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Jan 19, 2021 08:48am
FDI is no direct indicator of economic health. India fared better in FDI but couldn't help slipping down -24% in GDP.
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Jan 19, 2021 08:49am
PTI’s fake claims exposed yet again.
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Jan 19, 2021 08:51am
For Pakistan friendly foreign countries means China, Turkey and malaysia. Now that investment also dropped! By the way how is the situation with Malaysia now?
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Jan 19, 2021 08:56am
This is "Naya" Pakistan !!
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Jan 19, 2021 09:01am
Truth can’t be hidden for long. High time people understand difference between Loans and investment
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Jan 19, 2021 09:13am
Shape of things to come.
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Jan 19, 2021 09:14am
This is what imran Khan and his team should focus on but he is fixated on using corruption claims as a tool for political engineering despite not recovering a single rupee and bleeding millions through so called NAB
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Jan 19, 2021 09:24am
@Fastrack, -24 percent for a single quarter hope you are a educated fellow
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Jan 19, 2021 09:29am
Results of smart lockdown are showing up now.
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Jan 19, 2021 09:36am
@Fastrack, You had nothing to slip, zero-Zero is equal to Zero. So don't compare with us. In90's our economy size was four time of your and now it is 10 time.
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Jan 19, 2021 09:39am
@Fastrack, you need to take economics classes!
GDP dip for India isnt permanent, but as cause-effect of strict nationwide lockdown when economic activity became zero!
In December’20, GST collection was at all time high of INR 1.15 lakh crore (roughly USD 15.7 Billion or INR 1,150,000,000,000), which show economic engines are bustling again!
But dwindling FDI flows show lack of confidence by foreign investors!
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Jan 19, 2021 09:50am
Where is CPEC and its 50 billion investment? Gen next would be stuck with bad debts and huge interest costs
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Jan 19, 2021 09:51am
@Fastrack, oh yes India has world biggest lockdown, now cases are lower than Pakistan and growth would be 9 percent in 2021.
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Jan 19, 2021 09:55am
Wait till cpec is complete. The world will bow
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Jan 19, 2021 10:05am
The combined charisma of IK and FM is the reason for this performance
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Jan 19, 2021 10:06am
@Fastrack, Sir that was for one quarter. I think you need to update your figures. See their latest stat. The economic activity has almost reached pre-pandemic level. But where do we stand? We even could not able to get USD 1 bn FDI?
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Jan 19, 2021 10:09am
The man heading the country could not even able to manage mere a billion dollar in investment? Does he qualify to be there? Just think what will happen if we get black listed by FATF.
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Jan 19, 2021 10:10am
The bad effect of pandemic but mostly PDM mayhem asking for an NRO.
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Jan 19, 2021 10:11am
Forget FDI, Even overseas Pakistanis are being scammed by housing schemes related to selectors!
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Jan 19, 2021 10:12am
@F-35, 'But IK was making statements that economy and exports were booming?'
Considering it's pandemic and PDM negative effect, still receiving FDI, no other country in the region has done as well.
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Jan 19, 2021 10:13am
@GenPapaJohn’s, 'PTI’s fake claims exposed yet again.'
Then how come highest current account surus 6 months in a row.
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Jan 19, 2021 10:16am
India about $40 billion in the first half not 2020.
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Jan 19, 2021 10:35am
"The United Arab Emirates (UAE), which was once the biggest trade partner of Pakistan, has started disinvesting"
The Arabs are smart. Why would they thrown their money down a dark well, when they can double or triple it by investing in India.
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Jan 19, 2021 10:44am
Will be picked up in few months back again. With corona virus most of the international world is stand still
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Jan 19, 2021 10:45am
That’s due to the bad customer services by our banks. There is nothing digital in Pakistan and who would invest in a country where you cannot travel personally for every transaction to complete. You cannot even open a dormant account remotely.
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Jan 19, 2021 10:51am
Most investments in solar and wind energy projects are getting blocked from the cabinet committee on energy . Protecting petroleum cartels
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Jan 19, 2021 10:57am
As long as we keep issues with India foreign investors scare to bring their money. If we settled the issues with India then you see foreign investment pouring like Indus water and gdp doubles in a year. That’s only issue. Print my words.
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Jan 19, 2021 11:02am
@Fastrack, current invest for future growth, you need finance 101 course
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Jan 19, 2021 11:03am
@Fastrack, not sure of your credentials in the area of economics and investment. FDIs are leading indicators of economy as it may take a quarter or more to result into economic activities. So far as India is concerned, its GDP growth for past the June and Sep quarters has been -23.8, -7.9 and expected to be small positive in Dec quarter this showing a consistent positive trend. An economy almost 9 times the economy of Pakistan, it has more sustainability and could quite well absorb the shock of 7 to 8% negative growth in FY 21. But as per the indications, their is a V shaped recovery and the next year is expected to be a big growth. The reports indicate that Dec 20 Goods and Service Tax collections were all time high. So, one should not get satisfaction from neighbor’s pain and rather address to ones own shortcomings.
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Jan 19, 2021 11:09am
But what happened to the "Dam Funds" ?
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Jan 19, 2021 11:19am
So NS avenfield apartments are worth 1.5m dollars only. That's nothing so not sure what all the fuss so about.
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Jan 19, 2021 11:21am
In the meanwhile, Total FDI inflows into India during second quarter of financial year 2020-21 is 28,102 million dollars. ... This takes the FDI equity inflows during the financial year 2020-21 upto September this year to 30,004 million dollars which is 15 percent more than the corresponding period of 2019-20.
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Jan 19, 2021 11:30am
During the middle of the pandemic who was expecting for a huge amount of foreign investments?
By the way looks like country will have the highest growth in GDP in Asia after China.
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Jan 19, 2021 11:30am
One must feel sympathy for Pakistan. Lot of money paid to lobbyists and such labs but no foreign news agency of government has even mentioned this. Much needed dollars down the drain.
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Jan 19, 2021 11:39am
@Shaking legs, I don't know if you are being sarcastic when you say the world will bow once CPEC is complete. General Global opinion and experience of countries who have taken massive loans (NOT GRANTS!) is that it is the receiving country that ends up doing the bowing to China!
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Jan 19, 2021 11:45am
@Shaun,
That judge ran away to England. He was going to live in a hut as a Dam guard.
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Jan 19, 2021 11:47am
@Fastrack, "FDI is no direct indicator of economic health. India fared better in FDI but couldn't help slipping down -24% in GDP."
The -24% growth rate was in a single quarter. FDI too had dropped in that quarter. FDI absolutely is a leading indicator of growth, employment and taxes. It is also a non-debt-creating way to fund a current account deficit. Indian forex reserves have grown by over $125 billion to $585 billion in last 12 months without having to run to IMF or some godfather country.
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Jan 19, 2021 12:11pm
Government must focus to improve Economy & Internal stability to attract the investments, instead of concentrate India & opposition.. Mr IK & it's government it's almost fail in all levels & Pakistan is under Turmoil for future... Average Pakistani is suffering..
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Jan 19, 2021 12:14pm
@Zak, import was stopped during that period and remitance come. wait for 3 months and you will come reality. IK is liar and false promise cannt turnaround
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Jan 19, 2021 12:27pm
@Fastrack, You are contradicting yourself. More FDI despite poor quarterly economic growth figures suggest that investors have confidence in the fundamental capacity of the Indian economy to bounce back and yield good returns. Despite a shallower drop in GDP growth, the reason why FDI is dropping in Pakistan is that even the so-called 'friendly countries' do not have confidence in the Pakistani economy 'bouncing back' since the pre-Covid situation was no better than it is during the Covid!
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Jan 19, 2021 12:28pm
Figures will be worst in the coming days if no vaccination done in Pakistan. People will avoid travel to Pakistan and not allow to land if you are coming from Pakistan. Please focus on the right things and throw IK out as he is incompetent. He is always trying to divert attention to nonimportant issues.
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Jan 19, 2021 12:30pm
@Zak, less imports due to covid resulted in this surplus. But mark my word situation will be worst in the next 3 to 6 months. IK's lies will not help, you need to take actions
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Jan 19, 2021 12:33pm
@Zak, CAS = Imports - Exports, So if imports and exports fall due to similar reasons, it isn't difficult to see positive CAS despite a poor economic state. Current Accounts aren't an indicator of the economy at all. For example, if you export a lot and import even more, to cater both to domestic consumption as well as using intermediaries for export of final goods, you'd have a Current account deficit and yet your economy might grow at 8+% generating millions of jobs.
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Jan 19, 2021 12:40pm
FDI decreasing but remittances increasing...... Great...... Keep on fooling....
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Jan 19, 2021 12:43pm
IK should claim his government efforts in reducing FDI when he was claiming his efforts for higher FDI.
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Jan 19, 2021 01:01pm
We're is the oil that IK discovered in Pakistan, it would have helped Pakistan economy, I work in the industry in middle East was hoping to come back and settle at home.
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Jan 19, 2021 01:10pm
CPEC will change which game?
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Jan 19, 2021 01:11pm
Highlight the economic negative effects PDM on the people. Flop jalsas failed now PDM after the public. Go but no NRO.
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Jan 19, 2021 01:13pm
@What in a name, 'India about $40 billion in the first half not 2020.'
You are mixed up, that's the amount foreign investors pulled out of india. Get glasses.
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Jan 19, 2021 01:13pm
Not a big concern. Pakistan is perfectly capable of producing any foreign exchange required.
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Jan 19, 2021 01:23pm
Investors loosing confidence in Naya Pakistan
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Jan 19, 2021 01:24pm
IK has given the economy NRO. Shame.
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Jan 19, 2021 01:24pm
@Zak, Nach Na Jane Angan Tedha.
Finding error with others does not help ..
Work on improving credibility!!
Loan based CPEC would result in to more outflow than inflow!!! That is called bankruptcy
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Jan 19, 2021 01:25pm
Even China is turning its back on us
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Jan 19, 2021 01:25pm
PMIK needs to go
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Jan 19, 2021 01:27pm
it's the pandemic, look around the economies of the world, I'm sure the minions of the pmln and ppp will jump around and say how if they were in government then every Pakistani would be living in a paradise.
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Jan 19, 2021 01:33pm
@Fastrack, So You say Pakistan is doing well??? No problem. Good for you. Bus Ghabrana nahi.
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Jan 19, 2021 01:40pm
@Shaking legs, Yeah, pakistan will give money to china, uae and others once cpec is complete
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Jan 19, 2021 01:42pm
@Fastrack, It surely indicates the lack of faith the world has in Pakistan, including China and Turkey.
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Jan 19, 2021 01:54pm
Neighbours to the East at it again.
Please praise/criticise the health of your own country.
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Jan 19, 2021 02:29pm
Which foreigner (including private Chinese investors) in their right mind will invest in Pakistan ?
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Jan 19, 2021 02:42pm
With Covid-19 what do we expect even rich countries in the West are suffering
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Jan 19, 2021 02:43pm
Sights and sounds of the ever increasing, rapidly expanding, fastly growing and almost unstoppable coronavirus pandemic.
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Jan 19, 2021 03:43pm
Nuclear Islamic Pakistan with CPEC
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Jan 19, 2021 06:53pm
@Dr. Salaria, Aamir Ahmad, 6 billion USD flowed into india last month..what pandemic are u raving about now..go get some credibility and stop lying through your teeth and dishonoring contracts and refusing to pay your bills to foreign investors..that would help
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Jan 19, 2021 06:59pm
@Zak, go sell buffaloes with ik to pay your internet bill.
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Jan 19, 2021 10:17pm
@F-35, no, look at what was stated in context with regard to the metrics of individual sectors.
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Jan 19, 2021 10:18pm
@GenPapaJohn’s, prove your lies Looters?
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Jan 19, 2021 10:22pm
@Babubhai, apart from CHINA , Many are struggling to maintain growth, so INVESTING abroad is not a top priority
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Jan 20, 2021 12:34am
Look at the positive side of it. Despite a considerable outflow from the portfolio, the Stock exchange kept on bullish trends which definitely means that the domestic economy is on the rise.
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Jan 20, 2021 02:35am
Who is blocking liquidating PSM, who is blocking coal mining, who is blocking green investments in solar and wind energy proposals... everyone knows it
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Jan 20, 2021 04:22am
I feel dis dumb understanding the financial reports . Foreign remittance goes and the foreign investment goes down. What’s the financial forecast of this country
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Jan 20, 2021 11:13am
@Fastrack, Try to compare with BD first, India is much much higher to your reach.
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