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FDI up 15pc on CPEC inflows in July-March

By Shahnawaz Akhter
April 19, 2016

KARACHI: Foreign direct investment (FDI) into the country has registered 15 percent growth during the first nine months of the current fiscal year, owing to the inflows for projects under the China-Pakistan Economic Corridor (CPEC).

According to data released by the State Bank of Pakistan (SBP) on Monday, the country received $975.4 million as FDI during July-March 2015/16 as compared with $832.2 million in the corresponding period of the last fiscal year.

The FDI from China grew by 167 percent to $516 million during the period under review as compared with $193.3 million in the corresponding period of the last fiscal year.

China has launched $46 billion worth infrastructure development plan in Pakistan. The government has estimated $2.1 billion FDI disbursement from China in 2015/16, and power and construction sectors have been estimated as the prime recipients.

A day earlier, Ahsan Iqbal, Federal Minister Planning Development and Reform, said the first phase of the CPEC would be completed by the year 2018. The minister said the production of 10,000 megawatts of energy under the CPEC would help overcome the energy crisis by 2018 as well as upgrade the existing road network of the country.

The SBP in its second quarterly FY 2015/16 review on Pakistan Economy expected more FDI in power and infrastructure from China.

The data of foreign investment showed that inflows from China offset the fall of inflows from other countries. “The fragile global economy and growing turbulence in financial markets led to stagnation in FDI inflows to Pakistan,” the SBP said. “However, investments from other countries will take some time to pick up, as: global economic growth is expected to remain subdued; and low oil prices will keep oil-related FDI on the sidelines,” the SBP added.

The total foreign investment into the country, including private and public, however, registered decline of 69.7 percent to inflows of $567.2 million during the first nine months of the current fiscal year as compared with $1.87 billion in the corresponding period of last year.

The foreign private investment posted 33.4 percent in which FDI growth offset the massive decline in portfolio investment.

The portfolio investment in the equity markets came down sharply by five times to outflow of $346.3 million as compared with inflows of $86 million.

Analysts at the equity market attributed the fall in portfolio investment to deteriorated oil prices in the international markets. They said that foreign investors were either shifting their investments in other scrips or withdrawing.

Foreign public investment registered decline of 104.6 percent to outflow of $44 million as compared with $954.5 million.