KARACHI: Foreign direct investment nosedived 52 per cent during the first four months of the current fiscal year (FY23), reflecting the poor economic health and political instability in the country.

The State Bank of Pakistan’s latest data issued on Monday showed that the FDI fell to $348.3 million in July-October FY23 from $726.5m during the same period of the last fiscal year (FY22).

The FDI has been declining each year while the volume of investment is also very thin compared to that of regional countries like India, Bangladesh and China. While the main investment is limited to a few sectors, the FDI inflows are limited to a few countries.

The highest FDI of $74.8m came from China during the first four months of the current fiscal year against $99.5m during the same period last year. China has been the biggest investor for the past several years, but its investment has started declining as reflected in the comparative figures for two years.

However, the FDI inflows from the United Arab Emirates increased to $67.6m in the first four months of the current fiscal year from $51.4m during the same period last year. This was the only significant increase in the FDI. A drastic decline in FDI was noted from the Netherlands as it fell to $37.7m from $188m last year. The FDI inflows from Switzerland also declined to $46.6m from $50.9m.

The inflow for electricity and gas was the highest in terms of dollars as it rose to $149m in the first four months of the current fiscal year from $114m during the same period last year, followed by the finance and insurance sector at around $102.7m, but it was significantly lower than $157.2m recorded last year.

A massive decline in the inflow was noted in agriculture, forestry and fisheries as it fell to $8.7m from $154m. Mining and quarrying, manufacturing and information plus telecommunications received $15m, $10.6m and $20.7m, respectively, in the first four months of the current fiscal year against $59.4m, $50m and $79.4m during the same period last year.

Rupee falls against dollar

The US dollar kept its domination in the inter-bank market on Monday while the open market was short of dollars with unreliable exchange rates. The dollar closed at Rs223.66 in the inter-bank market, an increase of 49 paise, from the previous trading value of Rs223.17.

The open market quoted a dollar rate of more than Rs230, but the greenback is not available. The shortage has badly impacted the open market rate. The only reliable rate is coming from the inter-bank market but that too was influenced by the State Bank.

Published in Dawn, November 22nd, 2022