FDI rises by 15pc to $1.7bn in July-May

KARACHI: Pakistan’s foreign direct investment (FDI) increased 15 per cent to $1.729 billion in 11 months of the fiscal year 2024, the central bank's data showed on Friday.

The country received a net FDI inflow of $271 million in May, which was lower than the $359 million inflow in the previous month, but higher than the $155 million inflow in the same period last year.

According to the SBP’s data, China accounted for the majority of FDI inflows into the nation. However, investments from Chinese companies fell by 19 per cent to $521 million in July-May FY24. On the other hand, direct investments from Hong Kong increased by 39 per cent to reach $322 million between July and May FY24, compared to the previous year. Additionally, Pakistan received $244 million in FDI from the UK, slightly less than the $248 million received a year earlier.

FDI in the gas and exploration sector rose 117 per cent to $277 million in July-May FY24. FDI in the power sector dropped 11 per cent to $742 million.

Analysts said the expectation of securing a fresh bailout from the International Monetary Fund, along with privatization of loss-making state-owned enterprises, boosted foreign investors’ confidence in the country’s economy.

Pakistan has been actively seeking foreign investment in the face of economic difficulties, and last year it created the Special Investment Facilitation Council (SIFC), a hybrid civil-military organisation, with that goal in mind.

Last week’s release of the Pakistan Economic Survey 2023–24 revealed that the Board of Investment (BOI) has taken several measures to boost FDI in the country.

It stated that the government’s all-encompassing initiatives, in which exports and investment complement one another, are what drive the promotion of FDI. The main goals of the BOI activities are to foster a business-friendly climate and draw both international and domestic investment to the country at large.

“Based on the consistent 30 per cent FDI component over the past four years, it is reasonable to expect this trend to continue strengthening as long as the economy maintains a stable growth trajectory and the investment outlook remains positive,” it said.

“Recently, a new political government has taken charge of managing the affairs of the state, with the primary objective of stabilizing the economy. The BOI expects to attract approximately $1.75 billion of FDI for FY2024, with a projected increase of $1.85 billion in FY 2025.”